Kingsview CIO Scott Martin discusses the young investor’s viewpoint and how it differs from older investors. He also talks about the current administration and Federal Reserve’s role in current market conditions.
Program: Cavuto Live
Station: Fox News Channel
NEIL CAVUTO: With the backdrop of inflation. You see it certainly in the prices of schools and colleges, public or otherwise. But there was a sign that maybe things are getting a little better, or at least the rate of increase we’re seeing in inflation now. It only a 6.3% annual rate is a sign Better Days are here to come that in other words, the rate of increase is slowing down. That had all the major market averages advancing. In the case of you’re keeping track of this right now, it had been eight down weeks in a row for the Dow, seven down weeks in a row for the S&P 500, both dramatically disrupted this past week for the month of May, by the way. And we have only one more trading day. Remember, there’s no trading day on Monday for Memorial Day, but on the 31st to the last trading day now the Dow and the S&P 500 have indeed turned positive. So what to make of all of that and where we go from here? Let’s go to Phil Flynn, the Price Futures Group, senior analyst, FOX News contributor as well, Scott Martin King Asset Management and Gary Calpine, Capital Management. Gary ended with you begin with you on what the markets were telling us. You know, this was one of those rare weeks where every single day the markets were advancing, at least the Dow was on the belief that maybe we’re through the worst of it. Are they naïve or are they prescient?
GARY KALTBAUM: I think what we have is a combination of, believe it or not, in less than two months, the Nasdaq had dropped almost 25%. In the S&P, 18%. So maybe an overshoot. But the PCE inflation rate for the first time in six months actually ticked down. So I think maybe the market.
NEIL CAVUTO: By the way that’s a personal consumption expenditure rate, you know, this stuff is got, but it’s a key gauge. I know the Federal Reserve follows, right?
KALTBAUM: Yeah. And it’s it’s what people spend the actuality of it. So I think a combination of that and you just get to the point where sellers get washed out, the short sellers in the markets are too happy. So they’ve got to put the frowns on the faces of the short sellers and get the Bulls all excited again. I’m not sure if this is a bear market rally, the start of something really good. I am still very worried about two things that are happening at the same time, and that is savings rates are plunging and credit card usage is skyrocketing. While even though inflation came down a little bit. CRB Index at a new high this week. And another thing with energy prices, oil went into the levels where we saw when Russia attacked Ukraine in mid-March. We’re not at the highs, but we’re starting to enter that fray. And if we start entering one 21 – 25, all bets are off. And the best analysts, energy analyst Phil Flynn will attest to that.
CAVUTO: And I will go to filling in just for folks at home who follow this stuff or try to when Gary talks about short sellers, those betting on stock prices declining, they’ve been richly rewarded save this past week. And the CRB to which you referred is the Commodity Research Bureau. It’s an index, a whole bunch of different commodities here that has been sharply rising, did not do so in this past week or not nearly as dramatically. Phil Flynn A big issue with inflation is gas and oil, natural gas, all of that stuff that’s been jumping. Now, we’re supposed to be relieved because it’s not jumping as much. But what do you say?
PHIL FYLNN: Yeah, absolutely. Because, hey, what do we go up 17 days in a row and we finally went down 1/10 of a penny and then we hit another record again back up in the new record. But yeah, I do think that that is some encouragement. It looks like the market is starting to level up and it even looks like the Biden administration is even considering some real changes that could actually help the situation. There were reports that the Biden administration is looking at perhaps reopening some of the shuttered refineries that basically some of their policies have closed down.
CAVUTO: I believe that when I see it Phil. You know, I don’t want to get ahead of myself here, but we’ve heard these teasers before. If it doesn’t happen, won’t oil just keep rocketing?
FYLNN: It will. You know, unless we change the policies we’re in, Neil, I mean, we’re doomed to repeat the same cycle that we’re in. Listen, we’ve we’ve depleted our backup reserves. We’ve we’ve sold out our Strategic Petroleum Reserve that was supposed to bring prices down. It had the opposite effect because people look at US inventories, they used to say, well, you know, even though they’re low, they’ve got all this oil in the reserve. That’s not true anymore, you know.
CAVUTO: Not as much or not as much. You’re right about Scott Martin from a young investor’s point of view, and they’re the ones who got into this market late and we’re told we’re were the ones leading getting out of this market sell off fast. What do you tell them?
SCOTT MARTIN: Yeah, it’s definitely not me. I’m not telling myself because I’m much, much more years in advance there, Neil. But I’ll tell you, after listening to the guys here so far, Gary and Phil, all due respect, I’m depressed. I mean, I had a a full week and a fun plan here. And that’s dashed because I think to your point. The young investor I think is going to be okay, Neil, because they have time. They’ve got time in the market. They’ve got time to dollar cost average. They have a hopefully a long runway of income ahead of them where they’ll be to put new money in. But gosh, I mean, we work with a lot of middle age to older, say, investors who are scared. They’re scared about bonds. They’re scared about income, and they’re certainly scared about stocks. And I think the one thing you mentioned, Neil, in your intro that was striking to me was talking about how things are getting better and they aren’t. They’re getting better because granted, things got so bad as Gary kind of put them. But isn’t that kind of screwed up in a sense because of the fact that the administration and the Federal Reserve have really botched this from day one? I mean, you have an administration, a President, Joe Biden, who doesn’t know how much a pound, a pound of ground beef cost. He probably doesn’t know how much a barrel oil is, certainly doesn’t know how much a gallon of gas is at at the tank. So at the pump. So it’s just like you have an administration, you have people in control who are supposed to, I guess, in quotes, take care of us or at least help things or get out of the way. And all they’re doing is messing things up at every turn. And therefore, while we’re seeing a bounce, it’s not something that I think is sustainable as long as we have these folks in charge.
CAVUTO: You know, and that a president yet who knew what the price of milk was. But that could just be me.
MARTIN: We should change that.
CAVTO: We could change that. Guys, thank you very, very much.