Kingsview CIO Scott Martin discusses oil prices, what gas prices might look like this summer and the possibility of fossil fuel creation in the US.
Program: Mornings with Maria
Station: Fox Business News
MARIA BARTIROMO: And it is time for the word on Wall Street. Top investors watching your money join me right now. Strategic Wealth Partners President and CEO Mark Tepper. UBS Financial Services Private Wealth Advisor Ali Macartney and Kingsview Wealth Management Chief Investment Officer Scott Martin. Great to see everybody this morning. Thank you so much for being here, Scott and kicking things off with you with this massive move in the price of oil. Crude traded as high as one hundred and sixteen dollars a barrel. That was the highest since 2008. We know that OPEC had their meeting yesterday saying that they will maintain an increase in output by 400000 barrels a day this month. That was lower than a lot was a lot of people were expecting. And yesterday I spoke with the power the future executive director Daniel Turner, about what he expects from the oil market. Listen to this.
DANIEL TURNER: One hundred and fifty easily. And if we do ever put sanctions on Russian oil, which is doubtful, but if they actually did, I think $200 a barrel oil is not impossible, and that will be devastating to our economy, to families.
BARTIROMO: Scottie, your reaction?
SCOTT MARTIN: I’m freaking out. You’ve been talking about it all morning, Maria, with some of the guests about just unlimited was a number that Donald Trump threw on there. And as you talked about with David earlier in the hour and five o’clock, the numbers are at least probably one 50 plus. He’s just heard from Daniel Turner there. So it’s scary. And it reminds me of a set up kind of similar to 2008, when oil prices spiked and then we had the economy get trashed. Now that was also on the back of the financial crisis, of course. But don’t forget that summer and how tough it was and how we’re coming up to a summer here when we’re coming out of COVID or we’re lifting the veil. The economy supposedly so great. Yet we’re going to be hitting summer driving season with with prices at seven or eight bucks a gallon. So the issue that I have more is the fact that you’ve been talking about it. Deggans said it earlier today, too. There’s just no plan as far as what this administration is delivering. The outlook is poor when it comes to any kind of support for fossil fuel creation here in the United States or utilization. And therefore, unless they come up with something different, this is definitely got a ticket to one 50 plus and possibly an economic recession not soon thereafter or very soon after.
BARTIROMO: Well, you know, you look at this week, Ali Oil this week alone is up twenty four percent. That’s just the week and the Federal Reserve obviously watching closely. Jay Powell yesterday on the Hill. And by the way, he’ll be back on the hill today. He will say much of the shame that he said yesterday, and he proposed a quarter percentage point rate increase at the central bank’s next meeting that happens in two weeks. Ali, as you know, this hike is lower than what much of the market was expecting, right? The market was pretty much pricing in a half a point hike in that meeting in two weeks, and it comes as inflation is at a 40 year high. Your reaction?
ALLI MCCARTNEY: We have had a ton of intra day volatility, but in the fixed income market and the equity market and coming into late last week, as you said, there was an overwhelming likelihood of a 50 basis point increase in March. At least that’s what the markets are forecasting and that was taking down all of equity markets, but especially growth stocks for all of the reasons that we we discussed every morning. So yesterday’s commentary was very meaningful in terms of being whether you use the word dovish, conciliatory and basically what he came in and did as you referred to it, the Powell pivot. I like that. Was he sort of xed out the noise that you’ve heard from other Fed governors that would allow people to get concerned about an aggressive interest rate policy that would crowd out growth, especially with this highly uncertain environment? And that’s what the market was looking for. So that’s why you had yet another one of these sort of about-face midday where you went from markets being, you know, really in the red to afterwards in the green. I think all the market wants to hear as it has been true all throughout the COVID period is this continued, we understand markets are uncertain. We understand situations are uncertain. We are being nimble, we don’t have a, you know, a preset plan. We are going to adjust. We have an eye towards inflation. We understand what’s going on in the market and the threats there, and we are going to address those as opposed to making, quote unquote another policy mistake.
BARTIROMO: Ali, is there an investment play here? I mean, I know the negative implications of one hundred and sixteen dollar oil, but do you want your own energy stocks here? It’s been one of the best performing sectors in the last year.
MCCARTNEY: Yeah, so look over the last couple of days, especially on on to on Tuesday. Cyclicals, so largely energy, financials, even industrials. So all the sort of reopening value players went down. So we are at lows that we haven’t seen in a very long time. We actually did take our our S&P numbers down just given what’s happening in the market and the massive uncertainty and the intricacies and interconnectedness of it. But we still see an S&P at forty eight hundred by the end of the year. And you know, individual investors have the benefit of not having to trade everyday, being able to hold long term. So I think that’s the place to go. I think industrials, financials, energy, we should be picking up here for sure.
BARTIROMO: Yeah. And Mark Ali’s taking her expectations down for the broader economy because of the impact on oil. Is it going to have an impact on jobs? We’re getting the weekly jobless claims out in an hour and a half. We’ll get the jobless claims out today and tomorrow, the jobs report. Economists are expecting 400000 jobs added to the economy in February. The unemployment rate ticking lower to three point nine percent. Does the oil shock hit the February jobs report mark?
MARK TEPPER: I don’t think so, not yet. And look, if we look at adding four hundred thousand jobs in February after like four hundred and seventy thousand in January, if the Fed really has a dual mandate, that’s the green light to follow through on their commitment to hiking rates so that they can fight off inflation. And look, my overall take on the jobs market right now is that it’s actually too strong. I think it’s overheated, and I think that eventually begins to hurt margins. And right now, if you think about it, the employee has pricing power over the employer. It’s a it’s a zero sum game right now where companies, they’re poaching talent from their competitors, they’re paying substantial premiums of like 20 percent, 40 percent. And those pay increases are not one time bonuses, they’re permanent. And the issue is you’re not getting talent that’s 20 percent or 40 percent more productive. You’re just paying more for the same productivity. And that, to me, just seems to be unsustainable. It seems like big companies are eating small businesses alive. And let’s remember small and medium businesses employ 50 percent of the private workforce. So how is a small manufacturing company supposed to hire someone at 12, 13, 14 bucks an hour when that same person can go to Amazon for 18 bucks? Or Target? Just recently committed to getting to twenty four bucks an hour over the course of the next couple of years. So the big get bigger, the small go extinct. And I don’t think that’s a recipe for success for our for our country, but
BARTIROMO: it’s a great analysis really pointing in and zeroing in on that and that jobs turnover. Ali, Makani, Scotty Martin, great to see you both. Thanks very much for the wonderful work on Wall Street. Mark Tepper, you’re sticking with this all morning and we’re grateful for that.
Kingsview CIO Scott Martin discusses cost pressures related to supply of labor, goods and materials. He also talks about a slowing economy and inflation rates.
Program: Mornings with Maria
Station: Fox Business News
MARIA BARTIROMO: Let’s get to the word on Wall Street. Top investors watching your money join me right now to talk stocks and investing in this market, Strategic Wealth Partners President and CEO Mark Tepper. UBS Financial Services Private Wealth Advisor Ali Macartney and Kings View Wealth Management Chief Investment Officer Scott Martin. Great to see everybody this morning. Welcome and thank you so much for being here. Ali kicking things off with you in an important market and an important week. Bank earnings in the spotlight this week. Yesterday, we heard from Morgan Stanley reporting a record profit for the full year, capping off a mixed bag for the big banks. Give us your thoughts on what we’ve seen from the bank earnings so far, Ali. What does that tell you about the macro story?
ALI MCCARTNEY: Good morning, Maria. So good to see you back. So you said it, right? The the banks every earnings season, four times a year like clockwork, they kick off the earnings season. And this year, especially this quarter, because of all the angst and the changing narrative about what’s the Fed going to do? And is the Fed too late? The banks even have more of a spotlight on them. They also have really tough year over year comparisons, right? Because if you think about what we were doing a year ago, we were all at home sitting here trading. There was tons of volatility. So what we’ve seen with the exception of some of the banks, but some of the really large consumer banks have missed on earnings. The importance of missing on earnings as opposed to missing on revenue is the exact story that we’re talking about and everybody is looking to in the economy, which is labor force inflation cost pressures. And can you earn more than you more than you have to pay out? That’s what a lot of the banks are facing. Right? Compensation charges are higher than they’ve been. And so what that for tells for the rest of the economy in the earnings season is what everybody’s looking to.
BARTIROMO: Yeah, and look, Ali, we heard that from Jamie Diamond last week when he joined me on this program, he said for the first time in my life, I’m seeing huge pressure on wages and on people. I mean, I thought that was compelling coming from the chairman and CEO of one of the largest banks in the world, saying the first time in his life, he’s seeing huge pressure. His word, not mine. Huge.
MCCARTNEY: Yeah, so when you talk about, you know, a the lack of labor force and how we recover not from the pandemic, but how we move to the next chapter of having a robust, retooled labor force so that companies like that run by Jamie Dimon, like those manufacturing companies, can control their costs. That, I think is exactly what people are looking to. And that is why the market reaction has been so strong.
BARTIROMO: So, so, Scottie, we’re going to get another window into all of this this morning, we’ll get jobless claims and the Philadelphia Federal Reserve. The Philly Fed report out at 8:30 this morning, and then we’ll get existing home sales out at 10:00. All of this in the face of expectations that the Federal Reserve is going to raise interest rates multiple times. We spoke with Satori Fund founder and portfolio manager Dan Niles last week, and he was really ahead of the sell off. Here’s what he told us last Thursday washes.
DAN NILES: (Clip) I think the Fed’s going to raise rates five to six times. I think they’re going to start to work down their balance sheet this year, and I think you’re going to have 10 year Treasuries get close to three percent when all said and done and twenty twenty two. And I think that’s going to drive a 20 percent correction in the stock market, the S&P 500 at some point during the year because I think you’re going to see multiples compress a lot.
BARTIROMO: So, Scottie, we already have the Nasdaq in correction territory, down ten point seven percent from the highs. Marathon Asset CEO also says he’s expecting Get this eight interest rate hikes eight. Your reaction, Scott? What are you expecting?
SCOTT MARTIN: I’ll take the under. Maria, I’ll take the under on that. As well as what Dan said, because remember, the Fed tried to do this a few years ago and it didn’t go so well and they quickly reversed course. This could be the same thing all over again. I liked what you and Ali talked about with regards to cost pressures and things, Jamie Dimon said. A lot of the cost pressures that are out there, Maria, are related to supply. Supply of labor. Supply of good supply of materials. If those things get rectified, the Fed can step out of the way again and let the economy breathe as it should because the economy is actually slowing down the rate of inflation. Yes, it’s still high, it’s actually slowing at a decreasing rate as well. So therefore the Fed can kind of still playing this game a little bit. Yes, get rates off the floor, but they don’t have to go crazy with eight interest rate hikes, for example.
BARTIROMO: Yeah, it’s interesting because one of our guests said that yesterday that they will try raising rates, but the reaction in the markets will not be good. So then they’ll take to the sidelines and take a pause again. We’ll see. I mean, look, where oil is Scott OK? Eighty seven dollars a barrel and the price of oil? Would you buy energy related stocks or buy a commodity on that?
MARTIN: We have been married and we’ve been buying commodities materials as well. Now the energy situation is probably more related to kind of these domestic policy out of D.C. But just one quick thing about the Fed to worry is that the Fed is a very dovish embodiment right now. So if you’re talking about the Fed going all the way hawkish and staying that way. Remember, the Fed probably is going to stick to their knitting long term and stay dovish as they have been.
BARTIROMO: Well, Mark, I know you’re looking at dips and trying to find opportunities to get in you like Teladoc and other health care names. All these questions, same issues. What do you think? How do you see all of this?
MARK TEPPER: Yes. So we’re actually I mean, right now we’re we’re we’re looking to buy quality stocks on the dip and we own Teladoc. In the past, we booked a good profit on it. We’re not in it now, but I’m really starting to look at it and it looks very interesting here right now. And if I told you that like Teladoc before you looked at the chart, you might possibly think I’m absolutely insane because it’s it’s one of those companies that kind of fits into that, that Cathie Wood basket of stocks that’s been getting absolutely hammered. But after you look at the chart, here’s what you’d see. You’d see that in January of 2020, pre-COVID, this stock was over $100 a share. And today it’s below that. It’s around seventy five bucks a share. And we all know telemedicine is the future. It was really an incredibly slow grind from traditional medicine towards telemedicine before COVID struck. But then it accelerated super fast, probably transitioned a decade’s worth of change in a few months. More and more people are doing E visits now. So when I look at Teladoc, twenty five percent lower than it was pre-pandemic, I feel like I’m able to get all of that transition that happened during the pandemic for free. So I’ve got a heck of a lot of margin to say if you could Teladoc go lower? Absolutely. It could be sixty five bucks next week. It could be fifty five bucks the week after. But if I’m confident that at seventy five bucks, it’s going to be at least one hundred and fifty bucks, whether it’s three years or five years from today. That’s a risk worth taking.
BARTIROMO: Well, I like the fact that you’re looking at places to hide, even if we do have a broad sell off, and it seems like this is an area that has a long runway. Mark, how many hikes are you expecting in terms of the Fed?
TEPPER: So if I’m looking at the Fed funds future, what they’re telegraphing a little over for right now, I think four point one and it’s interesting because a week ago it was three and a half. Yeah, so it’s gone from three and a half to four point one over the last week. And what’s the S&P done over the same time frame down three percent and not looking good?
BARTIROMO: Yeah, that’s a good point. All right, Ali McCartney, Scott Martin, great to see you both. Thank you so much for being here, Mark. You’re sticking around. We’re so happy you are here all morning long.
Kingsview CIO Scott Martin discusses the current US economy as it pertains to debt, spending, and small business.
Program: Mornings with Maria
Station: Fox Business News
MARIA BARTIROMO: Investors watching your money. Joining me right now is Kingsview, Wealth Management Chief Investment Officer and Fox News contributor Scottie Martin, Bulltick Capital Markets Chief Strategist Kathryn Rooney. Vera and Michael Lee, Strategy founder Michael Lee. Great to see everybody this morning. Thank you so much for joining me on a beautiful Monday morning. Scott, kicking it off with you. Got a mixed story this morning, but we’re watching inflation. We’ve got inflation data later on in the week. We’re getting the May Consumer Price Index on Thursday. How do you feel about markets today? We’re still not far away from record highs, although technology has certainly been rolling over. Assess the markets from your standpoint.
SCOTT MARTIN: Yeah, I feel a little less than fabulous today, and it’s not just because it’s Monday, we’ve got a big week ahead, as you mentioned, Maria, it’s the fact that folks from the administration and the administration itself seem to just be blowing it when it comes to policy and outlook here. I mean, Janet Yellen, as you’ve talked about most of the morning here, Maria is talking about higher interest rates being a plus for the US economy as we drive up debt, as we go crazy with spending, as businesses need to lend to to fund their operations, to get back on their feet and the administration blowing it from a domestic and global policy as well. I think we have a lot of risks here, as you’ve been speaking with several guests this morning about how things pan out with respect to inflation, spending growth and frankly, interference, Maria, that the administration is running on mom and pop America who are just trying to get back on their feet and get back to be part of the economy that we have ahead of us.
BARTIROMO: So we know that President Biden does not have support for this package, Scott, he would like to get it all through through reconciliation. He wants to spend another five trillion dollars and he wants to raise taxes by the highest tax increases that we’ve seen in a generation. But again, he doesn’t have the support. If we were to see higher taxes, does that impact stock market negatively later on in the year?
MARTIN: Of course. And I think you’re right about the number. I mean, the numbers a moon shot right now. I mean, with respect to what we’re seeing in Congress, what we’ve seen from Joe Manchin over the weekend, it’s a moon shot. I mean, that’s a big number. But the reality is this administration starts high, they start histrionic, and then they chop it down and say, hey, we’re making a deal with you when in reality the deal was a bad deal to begin with. So that’s the tactic. That’s what I’m worried about. And I think markets will be eventually to.
BARTIROMO: Yeah, I mean, markets are treading carefully here, Catherine, we’ve got news just over the last week of this beginning of selling some assets on the Fed’s balance sheet. Now, they say that’s not tapering, but they’ve already announced that they’re going to start selling some assets that they accumulated on the balance sheet during the 20 20 pandemic. And then you’ve got the infrastructure spending package. The federal part of this, President Biden set to meet with West Virginia Senator Shelley Moore Capito later today. He’s got this last ditch effort to strike a bipartisan deal on this massive spending bill. What’s priced into the market? How do you see all of this playing out, whether it’s the spending bill that he’s trying to jam through reconciliation, which is not happening because of the Democrat lack of support or the Federal Reserve beginning this campaign sort of tiptoeing in to the tapering.
KATHRYN ROONEY VERA: Yeah, well, thank goodness, hallelujah, they’ve started to even talk about tapering, remember Maria and the audience, it’s important to remember that the corporate bond position is very, very small. So that was that was a very unusual and unprecedented way to go about quantitative easing. So they’re going to start to roll off some of those corporate bond holdings. The biggest companies, I mean, we’re talking Apple, Daimler Chrysler Anheuser-Busch. These were effectively being subsidized by the federal government. The question I ask myself, Marie, is why this insatiable thirst by the federal government to increase spending? We had six trillion dollars approved by the by Congress for covid. We have two point three trillion dollars remaining from those funds. This is data from the bipartisan committee for a responsible federal government. So why not use some of those funds instead of talking about increasing taxes? You know, not even if they can get infrastructure done. We don’t have the raw materials or the human or the manpower to do so. If the federal government were to slowly or maybe very quickly get rid of the emergency measures that are no longer needed because we’re out of the emergency effectively, then maybe we’ll have a chance of getting those construction workers to build those roads and bridges. But even as of right now, we have the money. It’s in the covid funds. We don’t need to keep paying unemployment benefits that are keeping guys and gals on the sidelines and this inexhaustible, I think, interest in indebting exponentially. The United States government is very concerning. The markets tend to your question, Maria, are completely pricing in a continuation of both monetary and fiscal policy. That’s probably right. But once we do get that big surge in inflation, interest rates are going to go have to go higher and the party’s over. So I think that investors have to be concerned. I’ve talked about inflation for some time now and they have to protect their portfolios with inflation protected instruments.
BARTIROMO: Well, I think you make a great point, Kathryn. You’re right. I mean, it’s more of an ideology. This administration wants to have a green economy, and that requires an incredible amount of spending and a change of the structural foundation of this economy. It’s going to mean incredibly higher fees and regulatory cost for for businesses as well. And the economy’s growing. I mean, we’ve got expectations of up to nine percent growth for the GDP in twenty twenty one without all of this spending. So just leave it alone. And what you mentioned about debt. You heard what Kevin what Jason Smith, the ranking member on the Budget Committee, told me yesterday in the 10th year of President Biden’s budget, we’re going to spend more on interest on the debt that we spend, all on our defense. We spend more than 700 billion on defense. The debt the debt interest is nine hundred and fourteen billion dollars in year 10 Kathryn.
ROONEY-VERA: That’s right, and look, even Social Security, we know that that’s a black box and that’s a Ponzi scheme, really effectively interest payments very soon and even before then, Maria, are going to exceed the amount that we owe for Social Security. So it’s very concerning. It’s completely unsustainable. And there’s only a certain period of time for which you can grow debt exponentially more than you’re actually growing the nominal GDP of the US economy.
BARTIROMO: Yeah, I’d say and Michael, we know that these rock bottom rates and this Federal Reserve stimulus has pushed investors to go out on the risk curve. Look at crypto Bitcoin is trading up this morning. It had a rough day, certainly over the weekend. It fell after Chinese social media platform Weibo suspended several crypto related pages. Goldman Sachs is also noting the ongoing hesitancy for crypto adoption. Michael, your thoughts on where we are on Bitcoin and the crypto market?
MICHAEL LEE: Look, as long as there’s money printing worldwide, Bitcoin and crypto aren’t going anywhere, you got a little bit of negative sentiment out of Goldman Sachs CIO survey saying that the CIOs they’re talking to said that crypto is their least favorite trade. However, just a couple of months ago, Bank of America did a similar survey and said that Bitcoin was the most crowded trade. We’re not going anywhere. Where Bitcoin is in kind of the middle of 30 thousands is typical of the pullbacks you’ve seen historically in the asset. I expect volatility continue, but I think all time new highs for Bitcoin are a long way from here. I don’t know if that’s this year or next year, but I think if you’re a believer in the asset as I am, you’d be buying more right here. You’d be dollar cost averaging in and taking advantage of the volatility that we’re seeing.
BARTIROMO: Yeah, I mean, it’s at thirty six thousand five hundred twenty nine, but just a couple of weeks ago it was at sixty five thousand. So there you go. All right. Great word on Wall Street, everybody. Thank you so much. Scott Martin, Kathryn Rooney, Vera and Michael Lee, great to talk with you. Have a wonderful Monday, guys. We’ll see you soon.