August 11, 2022

CIO Scott Martin on Fox News 8.5.22 – Making Money with Charles Payne

Charles Payne, EconomyFox NewsKingsview Investment ManagementKingsview PartnersScott MartinThe Fed

Kingsview CIO Scott Martin discusses conflicting job numbers, improvement in stock prices, and the likelihood of growth reflected in earnings numbers.

Program:  Making Money with Charles Payne

Date:  8/05/2022

Station:  Fox Business News

Time:  2:00PM

CHARLES PAYNE: Got a great panel to kick us off Defiance ETF CEO and CIO Sylvia Jablonski Kingsley Wealth Management CIO Scott Martin is with us along with Mahoney Asset Management President Ken Mahoney. Sylvia, let me start with you. You know, the the Fed all these Fed officials have been pissed all week. They’ve got to be really upset now because this so far is like a you know, the market saw the numbers. Oh, it’s a strong number. The Fed’s going to go crazy. We’re going to be down 500 points. The market’s like, yeah. I mean, what’s going on? Is it possible that the market knows something that the experts don’t?

SYLVIA JABLONSKI: Hi, Charles. Good afternoon. Well, look, I think that there’s a little bit of a tale of two markets going on. On one hand, you have these fears of inflation. You have these fears that the Fed is going to continue rate hiking us into a recession. And then, on the other hand, you have a hot jobs number which tells us that we’re if we’re in a technical recession, it’s probably not going to be that bad or not get that much worse. If you have that much sort of wage increase in income in the system. You know, the issue here is I think that there’s a little bit of certainty. At least we see that the jobs numbers hot. But I think that when you look at commodities prices, some of that information and data is coming down. So if we continue to see that soften in coming months and we see some of these job cuts that we’re hearing about play out in the market, like the Robinhood, the Coinbase, a lot of these companies, Wal-Marts, they’re doing massive job cuts. Perhaps that eases some some of the job market there. You know, maybe the Fed has another hike or two left. But I think that the market thinks that that won’t go on forever. I do think, though, that a pivot is off the table. Look, they’re definitely emboldened to to rate hike in September.

PAYNE: Yeah, there’s no doubt they’re going to hike in September. In fact, the street now sees 75 instead of 50. But that rate cut that was already built in for July of next year still is there. And you know, Scott, this is the thing that I

find intriguing. All week long, all the experts are saying, hey, the market should be a lot lower. This morning. It was supposed to go a lot lower. And, you know, there’s one of these times when for for whatever reason, many people believe the market is simply getting it wrong.

SCOTT MARTIN: It’s never wrong. If somebody wants to tell me the market’s getting it wrong. Then go play somewhere where it’s getting it right. Because to your question, is Sylvia about do the experts know something or not know something the market does? Yeah, they don’t because the market has it correct and the market’s going to do what the market’s going to do. But the market also sees, I believe, the more clear or, let’s say, kind of determinate future that’s going to happen here maybe versus the experts and some of the data that’s out there. Charles says, like you said in the jobs numbers is a little bit confusing. It’s a little bit conflicting. There’s good and bad to it. But the Fed has achieved a lot of what I think they desire to do from the outset. And they’ve put this fear in their behind the markets, behind investors that, oh, my God, they are going to go crazy to your great intuition there in the beginning. So when you look at the data that we’re getting today and some of the future data that the market knows going forward, that’s going to come in, I believe the market does know some of this data. I’m going to use another BG song. Charles, you should be dancing about this if you’re an investor because this is giving you improvements in stock prices here to get into and be relying on going forward to seeing higher prices forward going because of these stock prices have just come so far, so fast down and the earnings to you said are coming in good enough that it will support growth from here.

PAYNE: Let’s stay on these earnings for a minute, Ken. So 432 of the S&P 500 have posted results, 70% have been on revenue that your blended return there is 13%, 13.4. The Street was looking for 10.4. On the earnings side, 78% of Beat Your Returns, they’re at 9.2%, almost double consensus. You know, there was supposed to be a disastrous earnings season that hasn’t materialized. You watching these earnings and watching the reaction to these earnings, Ken, what’s your main takeaway so far?

KEN MAHONEY: Right, first, the macro. I go back three and a half weeks ago, July 13th, a similar day today where we had a 9.1% hot inflation number expected it was 8.8% and the market didn’t sell off sharply. Right. So there’s some type of persistent bid. So we didn’t have that in April when we had the

first quarter numbers. But we have that now, some type of persistent bid. A lot of hedge funds are offsides. And you look at the stories, you know, unfolding, you hear Wal-Mart. They missed their numbers and they blame the macro. Oh, the macro problem. You know, it’s an execution problem. I’m sorry, Wal-Mart. And then you find companies like Microsoft who beat raised guidance, raising their dividend, buying back stock. That’s the fast lane. That’s what we like the most in this earnings season are those companies. I think Microsoft’s the poster child for what can go right in an earnings season.

PAYNE: So yeah you’re defiance ETFs have been on fire as well five G quantum really killing it I know of course these are all long term plays for you, but what’s standing out in the near term, because I’m watching a lot of stocks, a lot of hot names that got hammered, you know, that people forgotten about. They’re coming on like gangbusters now.

JABALONSKI: Yeah, absolutely. Well, if you think about those two ETFs, I definitely am an investor for the long term. So I love this noise. I like the volatility. I like the dollar cost average in on these pullbacks. But with those two ETFs, the largest holdings in them are actually tech companies and semiconductor companies. So you’re talking about the AMD’s and the Nvidia’s that got knocked down a little bit and have rallied in recent days, give or take a couple of pullbacks around earnings. But if you think about that, where is the future? You know, the future is going to edge computing. It’s going to electric vehicles, it’s going to 5G through wireless phones. It’s going to be a massive growth opportunity for these companies. And, you know, you see you see the rotation now from value going back to growth. And I think that investors might be okay with the idea that we could have seen a bottom in tech or at least, you know, close to a bottom in tech. And from here on in, it might not be straight up, but there are definitely some good opportunities to dollar cost averaging. And so actually even in the short term, just because of how semis and tech have ripped, we’ve seen investors coming back in.

PAYNE: I have to admit, I got out of AMD, I think it was like 99, it went into the seventies. I think I had a seven hand. I felt like a genius and right now I feel real dumb and all that took was three weeks. So I got to tell you, it’s a lesson out there, folks. A lesson. These quality names, they get hit and they come back. Silvia Scott Ken have a great weekend. Appreciate you starting to share with us.

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