CIO Scott Martin Interviewed on Fox News 7.6.22
Program: Cavuto Coast to Coast
Station: Fox Business News
NEIL CAVUTO: So the implications for this and for you if they come to pass. Let’s go to Scott Martin on all of this. Scott, what do you think?
SCOTT MARTIN: It doesn’t look too great, Neal, but the good news is, as we’ve talked about over the last several weeks and months, the sooner we get the admission that we’re in a recession by the administration or some of our favorite politicians, the sooner we’re going to be at the end of this thing. If it drags out, if it’s one of those things where we almost convince ourselves that we’re not in a recession than we are, then we’re not. The longer this drags on and therefore, the longer the impact is on the stock market. So you almost want to rip the Band-Aid off. You’ve got to get the Federal Reserve to at least be more accustomed to say, be more dovish again, which sounds crazy, considering they’re on this massive interest rate hiking cycle, if you talked about today. But the reality is the Fed is, well, we’ll come around to seeing that this recession is here. It’s probably softer than most recessions in the past, but it’s one we’ve got to go through to get the stock market economy back together.
CAVUTO: What if it’s happening at some feared it might that that the higher rates and the higher prices are coming down of their own accord because maybe at a higher rates and everything else but it’s not leading to a soft landing. It’s leading to a pretty hard one and maybe a recession.
MARTIN: Yes. And prices coming down are a good thing. You’re right. The market reacting to that, consumers reacting to higher prices with less demand is obviously good for the overall kind of cycle of things. But you don’t want them to crash too hard because the volatility of just the prices alone, Neil, will trouble a lot of the businesses that are selling the goods. The other problem, though, with respect to this kind of recession, with respect to the inflation component, is the job versus the labor market type of situation that we have setting up. Jobs are plentiful. We’ve seen the JOLTS numbers out recently. They’re very, very good. The labor market, though, however, is very stressed, very odd as far as not going out and really applying for those jobs. I mean, I hearken back to some of the advice Kim Kardashian gave everybody earlier in the spring about getting up and working. Let’s say, look that one up. It’s a great quote. But she’s actually kind of right. My inner Kim Kim Kardashian is coming out here because people are not going out and seeking those jobs. You know, they’re there. That would help the economy get back on its feet and get consumers back to work and actually increase wages and therefore combat some of the inflationary pressures that we have going on right now.
CAVUTO: You know, I’ve been arguing and, you know, maybe incorrectly, but I think I’m right that that this is certainly nothing like the seventies experience yet. And you and I have gotten into this a lot, Scott, that it could be that, but I don’t see that right now. I see a strong labor market not as strong. But again, another reminder that 11.3 million jobs are open versus 6 million unemployed in the US. So a lot of jobs go begging and that’s a strong environment that would take a lot to chip away at. It could still happen. I’m just wondering if that could be the economy and maybe the market’s saving grace.
MARTIN: I agree. And I think those two kind of factors or say measurements, Neil, need to narrow because jobs as we’ve seen with some of the big companies that had plentiful jobs out there now have started to cut those offerings. And so therefore, perhaps the consumer, the job seeker, goes out and finally finds the job they’re looking for. But to your point about the seventies, we are seeing that similar shock, though, that similar feel of how these rising prices, rising interest rates have really impacted us all as consumers. But it’s probably because, unlike the seventies, we had it probably too good for a few good years here. So the reality is where rates are up, they’re not going to stay this high probably, but they are going to be higher than they have been in the last ten years as our price is, because we frankly out of the financial crisis, we’re in a massive disinflationary or almost deflationary environment where the stock market was going up. The Fed was very accommodative and things were very affordable.
CAVUTO: Are you bullish now or cautious?
MARTIN: I’m getting there. I’m getting bullish. So kind of cautious, leaning bullish every day because the sooner or the faster that the market kind of falls and reacts or overreacts to a lot of this bad data that’s out there. Neil, I think the closer we get to a bottom and some of the stocks out of there, out there, the Apples, the Googles, the Microsofts, to name three, those are trading at really massive discounts to where they’ve traded in the last couple of decades. So they’re very tantalizing for investors that work with us with respect to 1 to 2 year time horizons, because those stocks will be higher after that period.
CAVUTO: Got it, my friend. Thank you very, very much, Scott Martin, following all of those developments.