CIO Scott Martin Interviewed on Fox News 7.8.22 Making Money With Charles Payne
Kingsview CIO Scott Martin discusses diversification and looking at stocks like 3M, LRCX and Cleveland Cliffs due to how they’re trading versus historical norms. He also talks about further Fed hikes and how those will affect the consumer.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: All right, folks, I don’t want to jinx it, but don’t look. Now, we may have our first five day winning streak of 2022. Of course, most market observers are going to write it off. They’re going to say it’s just a bear market bounce. Some will also say, hey, it’s just seasonal. By the way, historically, the 27th week of the year, which this is generally the second best of any given year. Now for the answer, though, I got the market bros together. We got Qorvo CEO Rob Lowe and a King’s View Wealth Management CEO Scott Martin. Let me start with you, Rob. I mean, listen, you have been more constructive the last few times you come on this show. So how are you feeling about the action we’re seeing this week?
ROB LUNA: I mean, I think the action is absolutely telling us that the market’s trying to put in a bottom, Charles. I mean, even today, you know, we’re not having quite the strength that we had the previous few days. But look, we had some bad news with that jobs number. We easily could have seen a retracement being down 2 to 3%. So the fact that the stocks are hanging in there, especially some of those leading stocks that we’ve been talking about, is exactly what you want to see if you’re an investor right now,
SCOTT MARTIN: Yeah, I agree. I mean, some of the reactions to, like Rob said, the bad data. Charles and just frankly, that wave of selling pressure has been met with visceral buying pressure. I mean, you’ve had days where the market’s down in the morning, you take your eyes off the screen for about an hour, you come back. And we’ve rallied 20 S&P points in the amount of time it takes me to crush a lunch at White Castle, which I did earlier today. So there’s a lot of things to be excited about. I’m in Nashville, Tennessee, man, so that’s what you got to do. So the reality is this, Charles, going forward, I think Rob’s right. You’ve got to build on some of the foundation principles of good investing with respect to, yes, diversification, but also get into some of those names that are not being talked about, being thrown out with the baby, the bathwater and the bathtub, knowing that this is a possibly new market environment where passion is going to be met on the buy side finally versus the sell side.
PAYNE: Well, then let’s drill down on that. Right, because I’m looking at this market in two ways. You can either say I’m going to buy the most oversold stocks out there or I’m going to chase the ones that are ahead of the pack. Right. Because that’s what we’ve seen. Whatever sparks off, everyone jumps in, they ride it till it dies, and then they look for the next thing. Is that the way to go about it then?
MARTIN: Yes, in some cases. And in my case, I would throw this into your great alignment there, which is I’m buying stuff now. Charles Just to be a little safer, maybe a little more cushion, stuff that’s cheap and stuff that has been absolutely decimated as far as a P valuation or a price to book or a price to sales level. Those three names, for example, that I’m looking at today, 3M LRCX and Cleveland Cliffs, if you want to get a laugh and make sure you’re strapped into your chair, look how cheap these stocks are trading vis a vis their peers, as well as as well as historical norms. And realizing that you’re getting some of these stocks at very cheap levels in a growth phase for a lot of those names, especially LRCX, one of the best of the chips out there, a great sector, those are names that you can have, I think some safety in if the market doesn’t keep going up like it is the last few weeks.
PAYNE: Rob, what are you looking at?
LUNA: Yeah, I mean, I’m going to stick with the name like Restoration Hardware that I just personally picked up last week. Charles, you know, keep playing the crowd strikes, keep playing the Palo Alto networks because irrespective of recession, those names are going to hold up a name I really like. New name, UI Path, symbol path. These guys are creating efficiencies, using software to take people out of the workplace. If the economy gets tougher, businesses are going to start operating more efficiently, making money off of things like algorithms. You’ve got to look at this company. Charles Path. Pat It’s going to be a winner.
PAYNE: I’ve looked at it. I mean, I think it might have been one of those hot IPOs that then turn around and crashed and burned. I love this idea of Restoration Hardware. I haven’t gone in there yet, but it was already down from 700 to 200 when they warned and it went down even more. I think that’s overkill. All right. Let’s talk about the Fed for a moment. I want to see what camp you guys are in, soft landing, deep recession or they go to. They don’t go far enough. Let me go back to you, Rob. Are you comfortable that the Fed is going to be able to help engineer this market rebound you’re talking about?
LUNA: Yeah, I mean, I’m definitely in the minority camp here. I think we have the potential to do that yet. Jim Awad on there talking earlier. Right. Look, there’s still some inflation, but it’s coming down. Look at the jobs report. It’s not anywhere near as bad as what people thought it was. Things are slowing down. But all this is telling me, Charles, is we’re getting to a more normalized environment, more normalized economy, where there’s some rationality in terms of pricing and all these different things we’ve been looking at.
PAYNE: Yeah, Scott, you can definitely argue that that jobs report was somewhat Goldilocks, right? It wasn’t so bad that, you know, you know, listen, I know a lot of people want it to be bad because they want us to get out of the inflation argument and into the recession argument. So the Fed will stop hiking rates, but maybe they can glide their way out of this.
MARTIN: Yeah. I got good news for people who love bad news. That’s an album cover that I used to love from somebody anyway. The point is, is this, though you’re right, like it’s the Fed is in an interesting spot, though, Charles, because the market has already kind of baked in. I think a lot of the Fed rate hikes that are coming, at least the ones the next to say in July, in September. But if they go beyond that and inflation data starts to say cool off, and as Rob pointed out, as we’ve talked about, a recession is definitely here. A further Fed rate hikes, let’s say, after September, is probably going to be the worst thing to happen to the consumer since Paris Hilton came out with her debut music album. So think about that.
PAYNE: Hey, I got less than a minute to go. Earnings season next week. Everyone’s looking for a bunch of disasters because they say estimates are too high. I want you both, if you can, to give me a name that you think in the season will blow away. Consensus. Scott, you first.
MARTIN: Yeah, I think, Charles, you got to look at the Microsoft and the Apples because I think they’ve been to ratchet it down. A lot of analysts are starting to come on board with those. But if you look at some of the earnings history and we’ve gone through periods like this before for those two companies, those are areas, especially in some other tech fringe into what they do. Those companies really start to outperform, especially if we’re at the end of what I think is this short lived, very shallow recession,
LUNA: Take a look at Amazon. I think that name has been beaten up. I don’t think it’s been nearly as bad as people think. They’re not looking at the U.S. side. Amazon, I think, is going to be big.
PAYNE: By the way. Google is talking about splitting up into two companies to avoid any sort of regulatory stuff. Would that make any of you a buyer?
MARTIN / LUNA: Yeah. Charles, the problem is valuations of each company.
PAYNE: Yeah, it sounds like two yeses. Rob Scott. Guys, have a great weekend.