Kingsview CIO Scott Martin On Fox Business Cavuto Coast To Coast 10.2.2023
NEIL CAVUTO: All right. There was a moment late yesterday when Speaker McCarthy was able to cobble together a deal to keep the government’s lights on until the middle of November. Stock futures soared more than about 150 points at that time. However, things have changed, and now stocks are down about 2 to 12 points. This shift is largely due to the view that another battle may be looming, possibly for the speakership in the House. We’ll discuss that in a moment. Removing Kevin McCarthy from his position as Speaker of the House will be an uphill battle, but there’s uncertainty surrounding it. Meanwhile, interest rates are rising, with the ten-year rate now approaching 4.7%. If this trend continues, we could soon reach 5%. The market is reacting to the reality of higher long-term interest rates. Scott Martin, CIO of Kingsview Asset Management, warned about this not too long ago. What’s your take on the situation, Scott?
SCOTT MARTIN: It’s worsened, Neil. As you mentioned in your introduction, we have a lot of uncertainty in the government, including the turmoil surrounding the House speakership. Additionally, I’ve been critical of the Fed’s stance on interest rates, which I believe is off-base. It seems that the market is preempting the Fed’s actions. However, as we’ve seen with further analysis of recent Fed statements, they may just be talking tough. I think they’re jawboning and trying to deceive the markets. Eventually, the Fed will have to ease back and even cut rates to support the economy. When that happens, it should set the stage for a stock market rally. But until then, we’ll experience days like today.
CAVUTO: October is often considered a volatile month for the markets. September lived up to its reputation, but November and December tend to be friendlier in the fourth quarter, often referred to as the “Santa Claus rally.” Do you still anticipate that?
MARTIN: I do, Neal. Interestingly, the worse things get in October, the more potential there is for a strong rebound in November and December. The market tends to react positively after a downturn, especially when consumer data and economic outlook improve. So, despite the challenges we’re facing now, I’m optimistic about the upcoming months, particularly with the support of consumer spending.
CAVUTO: A quick question about market rates. The Fed has limited control over longer-term rates like the ten-year yield. When these rates rise, does it relieve some pressure on the Fed, as the market is essentially doing the work for them? What are your thoughts?
MARTIN: That’s a smart question, Neil. It’s something I wish you were running for chairmanship for, but we can’t afford to lose you on the network.
CAVUTO: Well, someone’s got to buy the pizza, as you always say.
MARTIN: Absolutely, and we’ve got to pay for it too. So, I need another job to cover my fast-food expenses. But to answer your question, yes, the Fed should indeed be looking at market rates and recognizing that the market is aligning with their objectives. They should consider stepping back and letting the market work its course. I’ve often said, “Chill, Fed.” The market is trying to convey this message, but it seems the Fed isn’t getting it.
CAVUTO: Speaking of rogue investments, Bitcoin has been on the rise, currently trading above $28,000 per coin, up from under $26,000 in mid-August. What’s your take on this, Scott?
MARTIN: It’s quite remarkable. Bitcoin and other cryptocurrencies are considered alternative asset classes, similar to gold and silver, which we’ve included in our portfolios this year. They’ve had their ups and downs, but cryptocurrencies like Bitcoin have been on fire lately. Investors might want to consider diversifying their portfolios with these assets, especially given the performance of traditional assets like stocks and bonds.
CAVUTO: Well, if the stock market ever stops being entertaining, you can always pursue a career in stand-up comedy.
MARTIN: That’s a thought, Neil. You could be my sidekick.
CAVUTO: I’d make a good Ed McMahon. Thanks, Scott.