August 8, 2023

Kingsview CIO Scott Martin on Fox Business Cavuto Coast to Coast 8.8.23

CHERYL CASONE: Welcome to Cavuto Coast to coast. I’m Cheryl Casone. I’m in for Neil Cavuto. First to our top story. The Dow is plummeting as financial stocks take a hit with Moody’s downgrade of several US banks. We’ve got market watcher Scott Martin and Erin Gibbs here right now. Scott, I’m going to start with you. Moody’s taken aim at the banks. Is this the commercial real estate story all over again as those loans are still coming due this year and next? Or is there other concerns about these banks that we’re not talking about?

SCOTT MARTIN: Cheryl, love the jacket today, by the way. I’m not sure we’re going to play who wore it better, but I’m guessing it’s you. It’s funny you say about the commercial real estate story all over again. It’s maybe the commercial real estate story not yet to be played out, but fearful of it because of the fact, too, that we do have a lot of concerns over our debt, obviously our spending. But a lot of folks forget over the years we’ve seen that we’ve resolved a lot of these debt ceiling issues. We’re still the world’s number one reserve currency. We’re still the world’s best capitalistic society, best democracy, most trustworthy company in the world, country in the world, and therefore, folks will buy our debt. Cheryl So these debt downgrades from Fitch, from Moody’s, we’ve seen them back obviously in previous years and the teens years just about five, six years ago. So the reality is, and as we look at interest rates today, my friends, interest rates are down on the debt they downgraded because folks are rushing in to buy our debt. So I’m not that concerned about it other than it’s maybe a more, say, superficial downgrade that will actually create, in my opinion, a buying opportunity for equities. Well, Aaron.

CASONE: I mean, you know, Scott just mentioned Fitch and that obviously that downgrade of our our US credit rating was a big hit to the markets cost a lot of concern. In particular, it really does hurt those with auto loans, with credit card loans. It hurts the economy. And that’s the big concern on the other side. Fitch, I thought, made a really good point here, Erin year as we have these debt debates and everything gets political, does create market instability. And here we go again.

ERIN GIBBS: Absolutely. And I think giving a warning to the administration is healthy. And I know there’s a lot of when we talk about the Fitch downgrade across the US debt, where, you know, we can of course, we can look back to 2011 and how S&P gave a warning and then it really took all three rating agencies to downgrade the debt for there to be a real collapse because there was a big concern and the US just wasn’t able to react to it. But very different situation here. This is really about what the administration is doing and how we’re combating inflation. And so giving those warnings, particularly as you know, a smaller rating agency like Fitch, they can do that I think is useful and it should be on warning. But with regards to Moody’s today, I think just like we were saying, it can be an opportunity. They’re really specific about those regional banks being the most vulnerable. They have different types of balance sheets. Those are the ones you want to avoid. And so being able to look at some of your bigger diversified, your consumer lenders like your Citigroup, your Goldman, your JP morgan’s, they’re getting hit today in the stock market. And today is the kind of day where you might want to take those as a buying opportunity because they do have a very different type of structure than the type of stocks that were downgraded by Moody’s.

CASONE: Erin. I’m glad you mentioned inflation, Scott, I want to take that to you. Looking ahead to CPI coming out on Thursday and then PPI on Friday, the one thing that we have seen is energy prices and this would be the headline number obviously have been rising over the past three months gasoline, jet fuel, wholesale diesel. And while you could say, okay, food and energy, you know, that doesn’t account for core inflation, my argument is that it could down the line because that’s going to filter out into the system, into the consumer goods space. And that is where, you know, that’s when the market, I have a feeling, is going to start to get really nervous. We’ve seen these really intense Scott reactions to CPI in particular, more so than we used to. Is that what you’re expecting?

MARTIN: Somewhat. And you’re right, there’s been a lull kind of, Cheryl, on this commodity price inflation or re inflation, depending on what level you’re coming from over the several last several months. And that has put a cap on things like you mentioned, in oil and energy and things like that and certainly other commodity prices. And that’s been something that’s been absent, say, in this in this PPI, CPI and PPI rise recently. And one thing that does play in very heavily to production of goods and eventually services. So that is a concern. And that also could be speaking to the fact, too, that with the downgrades and some of the things that Aaron just mentioned, maybe a weaker dollar is in our future, which is why I frankly wore this gold jacket today, because gold, GLD could be an ETF. That could be a good solution here amongst this uncertainty amongst the banks and the US debt market. Even though I do think boys and girls, this is still a buying opportunity for equities because the market is going to overreact to downgrades like this. Because to Aaron’s point too, we’ve seen this movie before. For, and it does not end that badly. Yeah.

CASONE: All right. I like the bullish tone. Who wore it better? I’m going to go with me, Scott. It’s just the way it’s going to be. You got it?

MARTIN: You got it today. I’ll try better next time.

CASONE: See you guys soon. Thank you so much for that. Appreciate it.

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