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. Joining me right now, UBS Financial Services private wealth advisor Ali Macartney, Kingsview Wealth Management Chief Investment Officer and Fox News contributor Scotti Martin and Strategic Wealth Partners President and CEO Marc Tepper. Great to see everybody this morning. Thank you so much for being here. Scott, kicking things off with you. I want to get your take on the hurricane that’s coming. According to JPMorgan CEO Jamie Dimon warning of an economic hurricane on the horizon as a result of this Fed’s experiment and the monetary policy tightening. Also the war in Ukraine. He says Jp Morgan is going to be very conservative with its balance sheet. Your reaction, Scott?
SCOTT MARTIN: Wow. Well, the hurricanes here, I mean, it’s got landfall already positioned. So I think Jamie’s maybe a few days behind that or a few months. But it’s kind of funny to hear, Maria, the contrasting statements from Mr. Dimon versus Mr. Moynihan, who just a few weeks ago told you some things that were quite different. So, look, the data in the economy is not awesome. It’s not really horrible. So I think we’ve got kind of a soft landing slowdown definitely upon us. I think the hurricane, though, if we want to keep with that motif, is this administration, this toothless punch list almost making me speechless? Absolute lack of problem solving type of issues out of DC when it comes to all the things that the economy is facing. And let’s extrapolate that to Treasury Secretary Janet Yellen, which almost made me smoke my breakfast yesterday when I heard the sound bites you were playing from her about inflation and then her partner in crime, Fed Chairman Jerome Powell, who have completely all three of them, all three entities lost control of this economy, lost control of inflation, and have no policy to deal with it. So, look, the reality is we should all maybe take care as far as our finances here, be a little bit more sensitive to some changes in our lives, whether it’s our jobs, whether it’s our income, whether it’s our spending. And take that going forward, especially our investments, too, as stocks have certainly taken it on the chin here in the first few months of the year. Take that going forward as a way to say, hey, let’s get through this recession, this slowdown, which is upon us right now, faster and smoother than we had before, and come out of this better than we were when we got into it.
BARTIROMO: Yeah. Look, I’m not surprised at Jamie Dimon stance here. He says that the bank is going to be much more conservative. Let’s not forget what happened back in 2006 and 2007. Right. He came across, JPMorgan did and Jamie Dimon did and tried to help. When the US economy was facing a doomsday, he acquired Bear Stearns and he got slammed for it. Remember all the assets that he bought during that dark day? Then he got slammed by regulators. He said, I’ll never be there again. And he’s suggesting this again, that the Fed is going to start unwinding this balance sheet, is going to have lots of assets for sale. Guess what? JPM will not be there as a buyer this time around.
MARTIN: Yeah, exactly. And that’s interesting. Washington Mutual, too, back in those days, I mean, we can think about all those bad banks that were basically zombie banks. And you’re right, Jamie Dimon was a big hero back then. Still a very difficult time for us all to go through. I think the good news is, and pursuant to what some other things Mr. Dimon said yesterday, was that a lot of those conditions are not here this time. But it’s still definitely an economic impact to a lot of consumers and a lot of buyers out there.
BARTIROMO: Yeah. Mark Tepper, what do you say that he’s saying the balance sheet is going to be more conservative, lower earners are going to really feel the pinch if they can’t get the loans that they were expecting.
MARK TEPPER: Without a doubt. But look, I mean, to to Scott’s point, to your point, to Jamie Dimon’s point, they were put in a very, very difficult situation back in the mid 2000. And they don’t want to see that happen again. And to Scott’s point, I think that hurricane’s already here. All of the small business owners I talked to believe were either already in a recession or will be in a recession by the end of the year. And I think business owners on Main Street, I think they have a better pulse on the economy than the Fed who’s been lying to us then? Politicians who’ve been lying to us. So I’ll take my cues from them.
BARTIROMO: Well, what about this inflation rate at 8.3%? I wish that it was 8.3%. The stuff we’re buying is in the double digits. Like I mentioned, eggs earlier, up 22% year, year over year. The price of an airline ticket up 33% year over year. So, you know, the average is 8.3% after all of this is wild spending from this administration. But oil prices this morning are down. We’ve got reports that Saudi Arabia could boost production if Russia’s output falls after European Union sanctions, Mark. But the national average for a gallon of gas is still at an all time high this morning, $4.71 a gallon. Any expectations from your standpoint, from this OPEC meeting today, Mark?
TEPPER: I don’t know exactly what what I expect out of this meeting, what I would expect out of us as a country is that we should begin ramping up production. I mean, energy policy domestically has been mishandled for decades. Maria, if you think about it, back in 2008 when oil was over $140 a barrel, we were importing it. So we were buying it from other countries. A few years ago, when oil was 50 to 60 bucks a barrel, we finally became net exporter. So we finally started selling it. And even a fifth grader can tell you that buying stuff at 140 and selling it or 50, selling it at 50 or 60 is bad math. And this administration under the influence from progressives, they yeah, I mean, they’ve been blindly focused on green energy at any cost. But you need a hybrid approach over the course of the next few decades. You need to take the crosshairs off the industry’s back. But at the same point in time, Wall Street, Maria, has also condemned energy companies for pursuing production at any cost. So, of course, now they’re focusing on managing the pal because that’s what Wall Street has wanted. That means running leaner. That means less production. And all of that is bad for the consumer.
BARTIROMO: Well, I think it was you know, it was President Trump who loaded up the Strategic Petroleum Reserve. He bought oil to load up that reserve in the thirties. It was incredible. He saw the price of oil and said, well, it’s cheap, let’s buy it now. He was spot on. But Ali, we’re looking at more economic data out this morning. We’ll get the May ADP report out at 8:15 a.m. Eastern and get the jobs number out tomorrow, Ali. And, you know, I’m wondering if the jobs picture is going to start worsening, because you’ve already got a whole host of technology companies announcing layoffs. That’s certainly a telltale sign ahead of what could be a recession.
ALLI MCCARTNEY: It’s a great point, Maria. And the truth of it is we have a surplus of work in this country and a scarcity of employees. And right now, to your point, not only is that causing inflation because the employer is losing power and losing money to rising wage growth, but it’s also causing a lot of goods inflation, a lot of services inflation here. And so I think what this number is going to show is actually exactly what everybody is expecting, which is this amazing inflation picture for the employee is behind us and that the you know, what we’re looking at in the future, which is exactly what the Fed is trying to do, dampening consumption, dampening the amount of money that can be spent. Now, to your point, I spent the week before last in Silicon Valley with a group of venture companies. And the way that everybody there is to the Jamie Dimon point battening down the hatches and preparing for a quote unquote recession is by making their first list of employee cuts. Right. So when you talk about the pendulum swing, you talk about recession to expansion. That is definitely what’s coming next. That is battening down the hatches from an employer perspective.
BARTIROMO: Yeah, it’s a great point. But is that changing the way you’re allocating capital right now, Ali?
MCCARTNEY: No, I mean, not really. Right. I think that of all the things that have been hitting the tape and people have been watching since the the pandemic, there is much less sensitivity or reaction now to this number because everybody knows the path. Right. That just like we talk about, is peak inflation behind us. We know that peak unemployment or peak employment, the nature of unemployment is behind us. And so, you know, I think what we’re really looking for is to understand, can the Fed and this is everything that we’ve talked about and you’ve been talking about, can the Fed stop this cycle of inflation? And part of that is the job picture.
BARTIROMO: Yeah, right. We’ll get those numbers and see if it’s a market mover. Ali, great to see you. Ali McCartney, Scott Martin, great to see you both. Thanks very much, Mark. You’re sticking with us all morning and we’re grateful. Thank you so much. Great word on Wall Street.
Kingsview CIO Scott Martin discusses the 2:1 ratio of jobs versus people looking for work, and how companies are turning to robotics to fill job openings. He also talks about the technology sector’s stock prices and how they are reflective of the current environment.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: Scott Martin, you know, at his firm. He’s told workers you are in person 24 seven and I’m going to call you at three in the morning just to make sure you are. He’s a cruel man, but he gets the job done. Scott Martin, the Kingsview Asset Management CIO. Good to see you, Scott. But what do you think?
SCOTT MARTIN: And, you know, just for just for the record, real quick, it’s more than 24 seven at King’s View. So if people want to work here, it’s got to be 28, 12 or something like that.
CAVUTO: So we can’t hear you now. Are there no prisons? So, you know, obviously, Musk is sending a signal. I always think he’s smarter and more clever by half here. When he sends a signal, I don’t necessarily think it’s it’s towards Tesla workers exclusively, but maybe a veiled reference to those in the technology community for whom this is now seen as almost a birthright. What do you think?
MARTIN: It is. It’s a bit austere, I guess, on the surface, but I think he’s got a point. I mean, and you’ve seen the robotics orders in the United States, Neil Surge again this past quarter because of the fact that now mainly more I’m the high end it’s been more in the plastics and the metal side. So you’re looking at the automation, automotive industry, things like that, factories and such. That’s where the robots have been able to step in. But similarly so I mean, robots nowadays versus even a year, two or three years ago can do a lot and they actually show up for work. And nowadays you’ve got the American worker that’s almost nowhere to be found, the him. And how about benefits and pay? And therefore, these robots can somewhat take these jobs. I mean, you’ve got two jobs out there right now, Neil, for every one person looking for a job. And we’re still not filling those jobs even to boot after all that. So to me, this is something that companies are getting wise and smart about, and we’ll probably continue with that.
CAVUTO: And despite that 2 to 1 ratio, there was a time when it’s almost 3 to 1. And we are seeing added technology companies out of the blue, them laying off workers. Now, I know this was 60 somewhat companies and 16,000 positions over the last year or so, but that’s something we never used to see.
MARTIN: We didn’t. Now, I would say part of that is probably the fact because the technology sector I mean, look at all these companies that have now since taken it on the chin, to say the least, with respect to their stock prices. I think that industry got a little bloated as far as jobs and pay and benefits. So it probably needs to come down a bit. It needs to come in a bit, especially reflective of the environment that we’re seeing that we’re in now, especially on the tech side when it comes to advertising and spending. But certainly, yes, you’re right, these numbers are getting pretty stark and they’re going to start building up more and more as we go into the summertime. But then that will come back to come back around as the economy resurges. But hopefully we’ll get there sooner than later.
CAVUTO: Yeah, we get hockey on the one side, right. And all of a sudden workers think they’re, you know, inscrutable and indestructible and then you’re realize, oh, that’s right. Life is all about pendulum swinging. Great job, my friend. And I don’t think you’re that cruel. You’re a nice boss, but you’re a tough boss. Scott Martin, thanks for following all of that. We just call him Captain Bligh. All right. He’s not Captain Bligh. And Captain Bligh was very flexible when it came to remote work. You just did it in the ocean.
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.
CIO Scott Martin discusses the indicators of recession, the job market, interest rates and taxes.
Program: Cavuto Coast to Coast
Station: Fox Business News
DAVID ASMAN: Kingsview Asset Management CIO Scott Martin joining me now. Scott, you look at all the stocks that that are kind of indicators of where the economy is going. That’s what Wal-Mart is. That’s what Lowe’s is. That’s what Target is. These were, as we were saying in the last hour, these were the safe socks stocks compared to to the Nasdaq stocks, the fly by nights, and they’re down 25%. Are you are we looking square in the face of a recession here?
SCOTT MARTIN: Yeah. The recession is here, David. I think you’re right. I think and I love what you’re talking about with Lauren there previous because you’re right. I mean, you look at Amazon, too. I’d throw that in there. David is a retail bellwether, consumer staple name to some degree for many of us. And I think the recessions here, we had negative GDP growth in Q1. I think Q2 is going to be right there with it. That’s why two, I think the markets, David, as we parse things out in the last couple of months, why they’ve been so negatively reactive to so-so data, you know, they started seeing through, I think, a lot of the data and realizing recession was here or coming. So the good news, though, is that the sooner we get through this, the sooner we’re going to get out of it. And I know that’s not much consolation for many of us who are holding stocks today that are down. But the sooner that we can kind of get through this malaise, the sooner that these falls are drops happen, the sooner the markets can recover and go up. It’s just hard to get through at times.
ASMAN: It’s a strange recession. And again, so it was 2009. So we’ve had some recent history of strange recessions. But one thing that’s so strange, we have such a surplus of jobs, usually recessions and and lowering job numbers go hand in hand. In this case, we still have that overhang of 11 million unfilled jobs. Are those going to dry up pretty quickly if we’re smack in the middle of a recession?
MARTIN: Some will, but it doesn’t matter if they do because you’ve got two jobs for every one person that’s looking for a job. So they have some room to do that. I think it’s a great call by you to say it’s a strange recession, which almost like write a song with that title because then you’ll be on vocals, of course, and me on keys. Because here’s the thing. I mean, I don’t want to sing in front of anybody ever again. But here’s the thing. You’re right, David. That also probably means, though, that this recession, because I believe it’s here, will be short and sweet in the sense of we’re not going to see that crazy real estate fallout we saw in oh nine the crazy drop that we saw in oh one. We had the tech crash, terrorist attacks. We had a big jobs recession back then, too. So this could be a short and shallow one. But the key aspect behind this, the man or woman, if you will, behind the curtain is Treasury Secretary Janet Yellen and Fed Chairman Chairman Jerome Powell. Because they’re raising interest rates, David, into a recession now pretty precipitously. So how does that shake out with respect to negative GDP growth? Two quarters in a row and we’ve got, what, about 200 basis points in hikes coming down the pike from the Fed?
ASMAN: You know, the that’s not the only thing they’re raising. They’re also raising the number of regulations we have to deal with, particularly in the energy industry. And that’s causing more inflation. That is to say, all of the pressures that are causing inflation are just increasing the policy pressures. So I don’t think we’re going to end the inflation thing any time soon. The recession may be short lived because of the the economy coming back online after the pandemic, but the inflation is going to remain with us and stubbornly really kind of put a cap on growth, don’t you agree?
MARTIN: I agree to some degree, I guess I could say. I mean, I think the inflation picture, though, is starting to peek out a bit. We’re still high.
ASMAN: Oh, I don’t.
MARTIN: We’re starting to slow that rate of growth. Well, I think we’re starting to slow the rate of growth, David. I mean, we’re we’re going.
ASMAN: To wholesale now, forgive me for interrupting, but look at the wholesale prices, which are are precede the retail price increases. We’re in double digits on wholesale prices.
MARTIN: Sure. And that’s true, David. But that’s also a reflection of the fact that we have supply chain issues that are starting to get worked out slowly but surely and likely coming as as a reflection of slower demand because of the recession that’s here or coming. So that will help hopefully relieve some pressure on prices. But still to that point about where inflation is going forward, how companies are trying to pass along, we saw target comment on that as well. It’s really impacting that tried and true tried and true consumer that’s been holding us up all through, say, the pandemic.
ASMAN: Yeah. Yeah. And part of the other craziness of this recession, if we’re in it already, is the fact that you have so few houses. So even though recessions really hurt the housing market and it may hurt this time as well, because we have such a dearth of product of inventory in housing that may be secure if particularly if it’s a short lived recession. But it’s interesting, you’re the second market analyst we said we’ve had on who said it’s virtually 100% sure that we’ve got a recession coming. So it’s it’s not good news, but we’re going to have to learn to live with it. Good to see you, Scott.
MARTIN: Sooner the better. We’ll get up it quicker. See you David.
ASMAN: Thank you, Scott Martin, my friend. Thank you.
Kingsview CIO Scott Martin discusses Musk’s purchase of Twitter, what’s been happening with the stock, and recent rallies in the market.
Program: Your World with Cavuto
Station: Fox News Channel
NEIL CAVUTO: To Susan Lee on that, Scott Martin of Kingview Wealth Management. Susan, looking at that, if I’m a Tesla shareholder and I think the guy and the genius behind my company might not pursue or be distracted by by this other company, I’m going to be happy. Conversely, if I’m a Twitter shareholder, every company and I’m going to go the other way because this thing is looking dicey, or at least at its price. What are you hearing?
SUSAN LI: Yeah, and if I’m Elon Musk and I’m pledging some of my wealth in that $44 Billion takeover offer, I want the best deal, especially if social media companies are down 25%, discounted 25% since I made that bid. And you know, Elon Musk, he’s not just putting up this bid by himself. So he’s probably huddled with the Larry Ellison’s and other potential private equity, those other financiers in this deal, saying, should we be paying 54 to 20 when Twitter is trading at $40? I think there’s probably been a rethink, and especially in these times, by the way, where $1,000,000,000. Yes, that sounds like a lot for most people, for Elon Musk, not much. And especially if you can get the the property for cheaper for $10 cheaper, that might be a deal for him.
CAVUTO: You know, Scott, I wonder what the background for this could have been or backdrop and that is safe today. The selloff in technology shares, even Tesla shares to the point that, you know, he’s lost tens of billions of dollars on paper. Now he’s still the world’s richest man by far. I got that. But do you think secretly or privately he reassesses this? You know, that continues. I’ve got problems.
SCOTT MARTIN: Great call. It was a game. I think it was a game from the start, as we talked about on FBN a couple of times, Neil. Here’s the thing, though. Musk won because remember the libs that got freaked out about when he was coming in to even talk about buying Twitter and then when he made the offer and they accepted it. I mean, I watched the reaction of a lot of the left wing liberals and they got freaked out. I mean, they dedicated their
whole shows, their whole Twitter accounts to how this was a takeover and it was going to mess up free speech and all that stuff. So he laughed. I mean, he kind of got the reaction that he wanted. And to Susan’s point, the stock was probably the buy was probably too much, 54 to 20. Everybody knows why he did that. He’s probably going to come back in and say, hey, I’m going to offer 42. And if you don’t know what that means, go watch Dazed and Confused. All right. Because here’s the thing. He got kind of the reaction that he wanted for $20 billion.
CAVUTO: It’s a it’s a pot reference. It’s a family show.
LI: Exactly. April 20th recognized pot thing. So, you know.
CAVUTO: That’s right. But but on that point and it’s a very good one on Scott’s point, Susan, this issue with the technology sector in general, it had an extremely, extremely rough week and a lot of the stocks have been decimated. We can get off those boards, guys. I’m wondering here, talking about the markets now and talking about where they stand. This deal notwithstanding, I have a feeling that a lot of tech investors are debating, all right, I’m up a little bit. I’m going to cash out now when the getting’s good or how does this play, you think?
LI: And what’s the pain threshold? Is $11 trillion in losses enough? As Scottie will tell you, in these type of bear market sell offs, you have markets and sellers really exhausting themselves, meaning that they run out of things to sell and usually want to sell the things that you like the most lasts. And I think the fact that Apple fell into bear market territory down some 20% from recent peaks yesterday, probably the most widely held stock on the planet, the most liked since it’s a cash machine and returning a lot of cash to shareholders. And that’s why Warren Buffett bought in. I think that was an inflection point thinking, okay, well, I’m already selling my favorite stocks. What else is there to sell? And maybe there isn’t that much more in the portfolio and especially on a Friday. I think it’s indicative if stock markets go up, especially when you heard Jerome Powell yesterday talking about short term pain to get inflation lower and raising interest rates by one full percentage point, at least this summer and stocks in the week lower. Higher part of me and stocks rally into the weekend. I think that’s positive.
CAVUTO: If you have a rally, do you want to believe, Scott? You normally need to see it at least for a second day. And the rallies that we’ve seen have been one day wonders. I’m not dismissing this or pooh poohing it. I’m just saying that’s been the way it’s been going. How important will Monday trading be to you?
MARTIN: Big. Although today, to Susan’s point, was great. I mean, we actually held the rally most of the day in rally to beat into the close. I’ll tell you what, Neil, the only thing left in this market, though, there aren’t a lot of sellers left. It doesn’t look like, but there’s still emotion. And so as an investment manager for many of our clients and even my own account and both the Twitter hold her and a Tesla holder. So I need my medication this weekend. I’ll tell you what, when you’re buying stocks, when you buy something and you have to go to the laboratory afterwards, that’s probably a good buy. But if you’re buying something and it feels like it’s a surefire win, you’re complacent. This is a can’t miss. That’s when you should be selling. So take your emotion, flip it around, and that will tell you what to do.
CAVUTO: I could help you with that medication thing, young man, but that’s a whole separate issue.
MARTIN: Send it over. I’m out.
CAVUTO: Yeah. All right, guys. Thank you both very much. Have a wonderful weekend.
Kingsview CIO Scott Martin discusses events in China and the effects of COVID there, plus their rules and regulations.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: One little unknown fact here. There was a scene in Spider-Man that featured Scott Martin, and the Chinese said, We don’t want it if Martin’s in that we got an X him out that Sony did agree to get it. Very good to see. You know it’s got a that’s.
SCOTT MATIN: That’s why I didnt get the check.
CAVUTO: I hear you. I hear. This is very unusual. No, I mean, Lydia was getting into it, and it did take my memory. I remember once upon a time, and it they have a steady policy of just not taking up from anyone, even back to the interview. Remember that on the North Korea, you know, dictator and all they risk a lot doing that, don’t they?
MARTIN: They do. And it’s just more oppression. It’s more filtering by the Chinese government that ultimately hurts their people. Now, the question on Sony’s behalf and some of the other companies, Neil, that I mean, look, you look across the S&P 500, half of the earnings of the S&P 500 these days come from overseas. And a large part of that overseas amount is China. So companies need China. I mean, China’s middle class is the size of our entire country’s population and it’s emerging and growing even bigger. So that’s a huge amount of people that companies like Sony want to have see their movies. But it is an interesting point to what Lydia raised about where’s the where’s the line as to where companies are going to say, no, we’re not going to change that. I mean, one of the things that that really hurt me back in the day that China did was they banned Justin Bieber in 2017 from playing over there because of his bad behavior. I mean, the guy is a saint, so they’re trying to really filter out and admonish a lot of the things that are coming from the United States just to have control over it.
CAVUTO: Well, I was for that particular action. But in all seriousness, I do find interesting that, you know, a lesson to be learned here, I mean, that at great
risk to their finances. Sony, you know, at least three or four times has said we will not have other countries dictating what we show eventually. And that could hurt the bottom line. Of course, no one’s crying for the money that, you know, Spider-Man and the entire series has made to say nothing of some of these other flicks. But maybe it will embolden others to think China, especially now, is in a position not to be calling the shots. What do you think?
MARTIN: Correct in China, if at all, in the last several years, Neal, I think as far as the government goes, the CCP is definitely on their heels to some degree. The economy stinks. They’ve they’ve re botched, if you will. The latest outbreak with respect to COVID people are obviously hurting over there and hopefully taking up some of their own will with respect to what they can do. But China still has the government still has a lot of control over their people there. And so I think when you look at Sony, look at the stake they’re putting in the ground here and maybe some of the other stakes in the ground that other companies will do going forward, is it going to move the government off the block to kind of relent or at least not be as controlling when it comes to what comes into the country? And based on history from President Xi and his cohorts, they don’t move off the block. I mean, they stay pretty staunch about how they they rule and regulate. And so it’s going to be a push, push and pull with respect to how things go. But it is a big give up from Sony and some of these other countries companies with respect to other countries and how they deliver their goods and revenues they receive for them.
CAVUTO: Well, but what a tangled web they leave. See what I did there? What a tangled. It’s basic cable.
MARTIN: I said it better myself.
CAVUTO: Yes, I kind of run with it, Scott, the best way I can. Good seeing you again, my friend, Scott Martin on all of those developments here following what’s happening at the corner of Wall and Broadway.
Kingsview Partners CIO Scott Martin discusses the ten year Treasury rate, a tightening Fed and the reopening of the economy.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: We are focusing on what you’ve been focusing on for the last few hours, and that is what the Federal Reserve will do and announce in about 2 hours. We’re expecting a half point hike in the overnight lending rate known as federal funds, and a lot more rate hikes to come. By the way, a half point hike would be the largest we’ve seen since 2000. Again, we’ve gotten used to quarter point moves up or down, but nothing like what we could be prepared to see. And of course, that telegraphing of still more hikes to come, some say at least another seven hikes through the remainder of the year that could send that overnight bank lending rate prohibitively higher to three, four, maybe even 5%. Let’s get the read from Scott Martin right now as investors brace for all of this. First off, Scott, what are you looking for?
SCOTT MARTIN: 50 basis points today, neil, and a projection of another 50 in june, which is so interesting because that’s what the market has kind of been telling the fed to do. And we’re here and they’re likely going to do it maybe with some more hawkish meaning a little bit more kind of tapering commentary with respect to the balance sheet and the market should take that. Okay. But it’s one of those issues where it’s been volatile this year. If you look at the benchmark ten year Treasury rate, Neil, which is really the benchmark rate to a lot of rates that we all feel with regards to mortgages and lending and things like that. I mean, it’s doubled practically this year. If you go back to the end of December, worried about 1.5% on the ten year Treasury, now close to three. So that’s a shock. And I love the term you used the verb as as I’ve used with my kids before. It may not be what you’re used to, but it is the reality. And so we have to get into this new reality of a tightening fed, of a less accommodative Fed, a less accommodative Treasury Department with respect to stimulus checks and all those things and the reopening of the economy to happen, which I think is ultimately good for the market. And why levels at these prices, these price levels here that we see in the markets today are constructive for long term investors going forward.
CAVUTO: You know, just to get back, if you think about it, Scott, to historical norms, these short term interest rates would had been around zero for most of the last decade. We’ll hit around 1% today, likely by the end of the year, maybe be upwards of 4%, maybe more than that if you anticipate seven more rate hikes, if they were to do this every every six weeks at an FOMC meeting, a Federal Open Market Committee meeting, there’s no guarantee that all of those will be tepid hikes and or that we could still see ind-ra meeting hikes. Where do you see the Fed funds rate by year end?
MARTIN: I actually see it pretty low, neil, considering some of the projections out there, i think these next two rate hikes are definitely in the bucket. But I think going forward from there, you’ve got a slowing economy, somewhat uncertain job market with respect to jobs that are actually being taken versus jobs that are available. And frankly, tough comps on CPI and PCE, which are big key inflation measures going forward come the fall, meaning year over year, comparisons in those data points are going to be tough to remain hot. So I think inflation is going to start to slow and maybe tip over a bit. So the Fed may not feel as much pressure. But to your point, I mean, one of my favorite lines in a Grateful Dead song is the first days are the hardest days. Those are going to be tough for the market to digest, as you just mentioned, with Fed funds at zero for what seems like forever and inflation nowhere. I mean, we had a deflationary environment for the last 12 years coming out of the financial crisis. We couldn’t find we couldn’t create inflation anywhere, even though we tried. And so now it feels very difficult and challenging, but the market will get used to it. The market will get accustom to a more hawkish Fed and be able to go up again.
CAVUTO: All right. Now, you were referring earlier there to a popular retail inflation number and, of course, personal consumption index number, how much people are willing to spend. And both have been on an upward trajectory here. But there is a fear here that when all is said and done, we close out the year, despite what you’re saying, closer to a four or 5% overnight bank lending rate, which would be closer to what is the mean or the norm. But you seem to be arguing that the Fed will sort of pull that back a little bit, that it’s overdone. It you might be very right. And there are others who share that view. But if it’s interpreted as the Fed losing sort of its nerve to to address this, wouldn’t the markets revolt at that?
MARTIN: They would, and they have to some degree. I mean, the Fed took a while to get the first rate hike in. Right. And the market kept pushing it that way. And eventually we felt some pain and the Fed did it. So I think, Neil, though, we have to look at kind of the mantra in the behavior of this Fed over the last several years and throw out some of the recent talk, because I think they had to give the market some of that hawkish higher interest rate talk. But this is a Fed that at least last time I checked, I mean, looking over their their body of work, as it were, they don’t want to crash the markets. They don’t want to crash the economy. They don’t want to over tighten. And we have a midterm election coming up that is fraught with all kind of geopolitical issues as it is now, even in the recent days, as we’ve seen with Roe v Wade, I don’t think this is a Fed that wants to get involved in having, say, this hanging on their hats with respect to crushing the economy going into November.
CAVUTO: Either I remember a guy named Paul Volcker who didn’t worry about stuff like that. He just did what he had to do. Do I sound like.
MARTIN: He’s a real.
CAVUTO: Man? Yeah, I do. I’m the angry old man. Scott, hang in there, my friend. I do want to get your thoughts on China a little bit later in the show because some interesting developments there to follow that aren’t quite what you think.
Kingsview CIO Scott Martin discusses the technology names, what we’re seeing in individual performance and earnings reports, and the investor response.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: By the way, Tesla stock itself is up a little bit more than 3%. So the 120 some odd billion in market value that the company lost yesterday and that Elon Musk lost it directly yesterday as a result. That’s clawing back a little bit right now. But there does seem to be an issue here that whatever Twitter gains, Tesla loses. I don’t know if that necessarily applies here. Back to Scott Martin, Jonathan Hoenig. Jonathan, what do you think of that, that that, you know, this is the currency, this is the collateral that Musk is using to to purchase Twitter. So whatever Twitter gains from that, do you think it’s automatic that that Tesla down the road loses or how do you see it?
JOHNATHAN HOENIG: Not necessarily automatic, Neil. I mean, there is some historical examples of CEOs, in fact, running to companies, even pledging some stocks back and forth. Even Warren Buffett back in 1991, he ran Salomon Brothers and Berkshire Hathaway and of course, Steve Jobs picture in Apple and Musk with Tesla and SpaceX. The trouble comes when, as you alluded to, when a CEO pledges their stock. So Elon is pledging some of his Tesla stock to buy a Twitter. Now, if Tesla stock continues to decline, he’s going to get that margin call. And that, in fact, can cause the whole House to collapse. So as long as Elon doesn’t pledge too much, he should be financially okay. But if one starts to weaken, if Twitter starts to weaken, you could see tech writ large follow suit.
CAVUTO: You know, Scott, what’s interesting to me with most of the technology names that reported yesterday, important, improved numbers, even in the case of Google, which disappointed just a smidgen on revenues and earnings and certainly really missed on on YouTube revenues. The fact of the matter was Alphabet did commit to buying back $70 billion of its stock. The other technology names put and posted great year over year numbers, but they were not rewarded. And after hours trading somewhat moderately, you know, rewarded today. But it sounds like the stuff that used to propel technology stocks or keep them going isn’t there anymore, at least for an extended period of time, that could change. But what do you think of that?
SCOTT MARTIN: Yeah, I think it’s a market phase we’re in right now. It’s a tough environment. It’s definitely sell first, ask questions later. And to your point about some of the individual performance, Neil, leading into the earnings reports. A lot of these companies get back what they lost during the day, in the after hours market and then get sold the next day. So investors are definitely taking, I think, the stock off the table and just going to cash, going to the sidelines and waiting for better days ahead, which to me is an opportunity down the road here to start adding to some of these names which you already own, like Microsoft, just because you’re going to get them at lower levels, at better valuations.
CAVUTO: You know, I wonder and Jonathan, you can help me with this when when people are nervous with the market, they’re using it almost. And I hear this increasingly flipping around and watching different shows. It’s my job. I got to do it. They’re getting nervous about buying into rallies, as I said at the outset here. And I’m wondering if they’re overdoing it, if they’re overanxious. And I don’t know and you always mentioned, Jonathan, about your long term perspective, and I get that. But is it something different going on here? What do you think they need to be convinced about to do it? Because earnings are still, by and large, coming in better than expected. What do you think it is?
HOENIG: Well, more than anything else, it’s cliched, but diversification works. I mean, look, even if this is a, you know, a quiet period or a bear market period for technology stocks, as it was in the first ten years of the 2000, you know, tech stocks back then basically took a nap for ten years. But other sectors, sectors did well, real estate, emerging markets, commodities. So, I mean, I don’t think the market is down and out, but I think the leadership is changing. And people who’ve bet all their apples on Apple, Microsoft and Netflix this time around will probably be a little bit disappointed, just as they were with Cisco, Sun Microsystems and Oracle 20 years ago. So the market tends to move in cycles if there’s a bear market for tech, I don’t think it’s a bear market for stocks writ large. It just means you have to look at other opportunities.
CAVUTO: Got it. Gentlemen, I want to thank you both. Appreciate all of that.
Kingsview CIO Scott Martin discusses Facebook, Amazon and Apple. He also talks about a reduction in Robin Hood’s workforce and his expectation for the stock.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: That’s something we’re we’re keeping an eye on. How much ground could be made up for that? We get a read from Scott Martin, Kingsview Asset Management CIO Jonathan Hoenig as well. Scott, when you look at a day like today, I do notice it’s very, very hard for the market to put two back to back winning days together. They’ll get a, you know, a spurt of activity and all of a sudden it will dissipate and then more. The common rule is to sell than to buy. That might change, but it has been a pretty reliable rule of thumb. What do you make of that?
SCOTT MARTIN: Yeah, a factor of the market phase right now, Neil, you mentioned it. I mean, alpha earnings, you get good earnings, you get good revenues and the stock goes up and then gets sold throughout the day. So that’s the phase we’re in and that’s going to continue, I think, through this earnings season. But you mentioned a couple of names in your intro there. My goodness. I mean, Facebook coming out very soon. Amazon and Apple have to come out as well. The good news is, I think if there’s any silver lining with what happened with Netflix some days ago, the expectations are starting to come down. Google yesterday, too. So as these companies come out with new reports, if Facebook does fall flat on its face, pun intended, you might not have as big of a sell up as you one might think, because I think some of the things are happening in Facebook today, selling off right now that are getting into expectations of maybe lackluster earnings here, at least for this period of time.
CAVUTO: Well, if that happened to Facebook, that would be a major disappointment. See what I did there? It’s a meta. All right. Listen, guys, if you hate my wit, then, well, no one appreciates my wit. Jonathan Hoenig, let me ask you a little bit about and we’ve touched on this before, Jonathan, what you tell investors these days, some of them, especially with the big technology names and even with the fall off of some of them that have gone well into bear market territory, they still made a lot of money on them. And one investor was telling me, I just don’t want to run it back down to no gains at all. So what do you tell them to do?
JOHNATHAN HOENIG: Well, it’s all about one’s own individual context, Neal, and also expectations and also stocks themselves. I mean, as you mentioned, some of the names like Facebook, like Microsoft, Netflix down 70% year to date. So even made up, for example, it’s down 50% year to date. Well, now it has to gain 100% just to get back to even. So, I think some expectations setting is in order here. Look, we’ve had a dramatic comeback since the pandemic lows, everything from the meme stocks to the FAANG stocks, the technology across the board. So these are the names that have led the market on the way up and the fact that they’re sputtering, as Scott mentioned, sputtering so heavily now. I mean, even today, Neil, 555 new lows, only about eight new highs. So the market’s having trouble getting going without tech leading the charge.
CAVUTO: You know, guys, what I thought was kind of interesting and maybe a story of our times is what happened. Robinhood, you know, now announcing it’s going to lay off 9% of its workforce. This was sort of the means by which a lot of young people in particular, as you know, Scott, got into the market. And I’m wondering if that is saying something about the frenetic activity behind that and whether this is an indictment of that. What do you think?
MARTIN: There was just a flash in the pan for Robin Hood. It was also the Darling Neil to steal that word from you, the darling of the IPO smash that was going on about a year, a year and a half ago. So they got public, they got liquid. A lot of folks got rich off of that. They were privately holding those shares and they kind of succeeded in that route. But once they came out, once you kind of saw what the company was all about, had some trading issues and some other things going on there at the company that were not well run. Obviously, it got the right valuation and continues to do so. And of course, competition. I mean, with respect to what they’re doing, they’re not doing anything amazing with respect to how their business is. So therefore, as they continue in their say line of fight here, I expect the stock to go lower.
CAVUTO: For technology as a group. How are you playing at these days, Jonathan?
HOENIG: Well, I mean, I’m actually avoiding it, Neal. I mean, you know, technology is such a major part of the S&P 500 of the Dow. I mean, these companies aren’t tech companies anymore. You know, Apple, Microsoft, Netflix, these are the stalwarts of the old overall economy. So even if some of our viewers don’t think that they’re overweight in technology, just that S&P 500 index fund is likely has a big portion of it in technology stocks anyway, as Scott alluded to. I mean, look, the times are different now. We’re not in the midst of the pandemic, the peloton’s, the the zooms, those stocks are underperforming now. And inflation is the big story now. I mean, the ten year yields gone from about 1.6% to two and one half percent in just one year. So these are different times. I think they requires a different different portfolio than just technology stocks.
CAVUTO: All right, guys, if you can just stay right there. Want to get the latest right now on.
Kingsview CIO Scott Martin discusses inflation, the labor market, and mortgages.
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: Let’s go to Scott Martin and Jonathan Hoenig back with us right now. Scott, you know, we know that we’re anticipating strong inflation numbers, very high inflation numbers. And the fact is that even though Americans wages have been moving up pretty smartly throughout all of this, they’re still behind the eight ball here because they’re paying out more for everything from food to gas. How long do you think that remains, that that gap remains.
SCOTT MARTIN: Probably for the full cycle, Neal, until inflation starts heading back downward. Just because, to your point, they are so far behind. I mean, it’s going to be almost impossible to catch up given the structure of the labor market and the fact that, frankly, a lot of folks still amazingly don’t want to go back to work. So when I look at the financials and like Jackie talked about, that’s a great lead off, I think, for for the earnings reports that we’re going to see starting in Q2 here. But the financials are not performing well at all. I mean, you look at various stocks in that arena, Neal, whether it’s JPMorgan, Morgan, Citigroup, Wells Fargo looks a little bit better. Most of the banks look like, in a word, dog food on the charts. So something is going on there. And for us, we’ve been liquidating financials against the recommendations of a lot of other analysts out there this year, especially towards the end of last year. And getting more into real estate like XLRE instead. I think that’s a better way to play the lending environment than directly through the banks.
CAVUTO: You know, I think this is one of those quarters, Jonathan, where it isn’t so much the earnings that are going to get people’s attention, but the guidance and particularly with banks, what do you think they’re going to say?
JONATHAN HOENIG: Yeah, absolutely, Neal. I mean, as you know, the markets are forward looking, you know, and if Scott is exactly right, this inflationary cycle is just at the beginning. I mean, if history is any guide, this could be a five, six, even eight or nine year, ten year cycle of which the banks probably won’t benefit too much. Scott is exactly right. I mean, banks should be
doing very well right now because interest rates are going up. So what’s called their net interest margin is growing. As Jackie said, they’re basically making more money on that loan, those loans, but they’re underperforming. And I just think back, Neil, my biggest fear is credit quality. These banks have owned and issued a lot of junk bonds. 20 years ago, junk bond yields were about 18%. Even now, today, they’re only about 4%. So that’s my fear, is that the junk could get a lot junk here if the economy declines and even banks will get hit in that environment.
CAVUTO: You know, we’ve been waiting, Scott, if you think about it, for the stag part of stagflation to kick in. It hasn’t happened yet. And all of us have talked about this in the past. But I’m fascinated by that because I think a lot of people who try to draw the seventies parallel have yet to realize that that part of it, the economy just, you know, rolling over and dying. And that has not happened. Now, of course, it stays like this. And rates and overall inflationary statistics stay like this. It could be just a matter of time. But but do you think that avoids Scott, a repeat of the seventies for the time being potentially.
MARTIN: I mean, goodness, you know, the stagflation era of the seventies, Neal, like you said, is far away. I mean, we ain’t seen nothing yet with regards to what we saw a few decades ago and hopefully won’t the stag part of things, I mean, that’s kind of the story of my life as a personal note. So I get that part. But with regards to the banks going forward, what’s interesting though, Neil, about how Jonathan mentioned credit quality, I mean, I got a mortgage just recently, did some refinancing on some properties. My goodness. That was worse than an exam from the doctor that you don’t want to see if you know who I’m talking about with respect to how much they were looking into me and seeing what was going on, which gives me a little bit of patience and respect to what they’re doing because I think unlike 0′ seven and 0″ eight, there’s some more care that banks are taking and maybe they’re lending and expanding of their balance sheet so that maybe when we do pull out of this, when banks finally do get it together, the economy does grow again because there’s money out there for them to lend. They’re just being very stringent about who they want to give it to. That could refire the economy if things get lined up correctly.
CAVUTO: First, a reminder, Scott, it’s a family show. And secondly,
MARTIN: I thought this was.
CAVUTO: I assume you were talking about the dentist. Let me ask you. Of course. Of course, Jonathan. You know, young investors in particular were drawn into this market and the second wave of it, the bull wave. And and I hasten to add that a lot of them took their time coming, maybe burnt by what their parents went through in the financial meltdown, what have you. And I’m wondering, you know, if you’re twice burnt, are you are you really shy on that third go round? What do you think?
HOENIG: Well, you know, Neal, there’s an old saying, you know, you always want to avoid the herd. So find out what the herd is doing and then try to do something else and even go back to the late 1990s. You know, most people didn’t invest in stocks until January of 2000. That’s when most money came into the financial markets. Right and right when prices were at the top. So, you know, we’ve seen more money coming to the market in just the last few years in a lot of it. And not to denigrate them from from the Robinhood investor, younger investors who haven’t seen the type of interest rate increases. Commodity price inflation or bear markets. Those of us who’ve traded and been around a little bit more have seen. So markets can decline. They can decline quite precipitously. Even good names and good stocks, whether it be Apple, Tesla or all the rest. Sometimes good companies and good stocks aren’t the same thing. I think now it’s why now is a good time for caution.
CAVUTO: Okay, guys, I feel really old when you, of course, now support yourself as a like a Yoda of finance, Jonathan. But I guess that’s, you know, you’re doing enough. You know, you just feel that way. Guys, thank you both very, very much.