Kingsview CIO Scott Martin On Fox Business Making Money with Charles Payne 5.22.2024
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CHARLES PAYNE: My next guest says that the Fed is out of the game, folks, and that’s actually a good thing. So let’s bring in King’s View Wealth Management CIO and Fox Business contributor, Scott Martin. Scott, what exactly do you mean when you say that the Fed is out of the picture?
SCOTT MARTIN: Out of the game, out of the picture, not even sitting on the bench. Charles, I think the Fed has done it. They’ve engineered one of the most unheralded, unloved, and most benign soft landings in history. Frankly, what they promised they would do—despite all the criticism—they have arrived at the containment of inflation. It’s not quite at that 2% rate they aim for, which is probably just a T-shirt slogan anyway. I think about 3% should be fine. Employment is still strong. GDP is weak, but it’s not falling into the negative. The Fed has done what they promised, which means they need to keep rates stable here. I think they will, going into the election and beyond.
CHARLES PAYNE: So then, are you saying this is sort of… I know a lot of folks argue that if you look over the past 100 years, four and a half to five percent is where rates should be. This is “normal” or the normalization of rates. But it is new to folks who’ve been in this market for only 40 years. So even though this may be normal based on the past century, is that what the Fed’s trying to do now? Establish a new/old paradigm and back away gracefully?
SCOTT MARTIN: Yeah, good call. Another T-shirt slogan I’m in the mood for today: “normal for longer,” boys and girls. It’s crazy to think that the Fed needs to start cutting rates all of a sudden because the market’s going to fall or because of commercial real estate issues, which never seem to materialize. People worry that the Fed needs to cut rates down to one or two percent, maybe zero. It’s ridiculous. The Fed being here at four to five and a half percent, and maybe lowering to four and a half in the next two years, is prudent. They should use those bullets for real problems, not manufactured ones like bank failures or the sky-is-falling recession talk you hear on other networks. That’s what we need to be prepared for going forward, and I think the Fed is ready.
CHARLES PAYNE: Alright. In the meantime, you’re expecting some summer doldrums. Let’s talk about ideas you like because I know you’re into food stocks like Nestlé and Krispy Kreme. This seems to buck a couple of trends: the food inflation trend and the drug miracle trend where people say, “I took a shot, so I don’t need to visit Krispy Kreme anymore.”
SCOTT MARTIN: It’s a very sad story, something I wouldn’t subscribe to, but hey, people do that. It’s the weirdest thing. Speaking of food, there’s this rumor going around that I love food, and I actually do. Nestlé is rolling out meals for people using Ozempic and other drugs related to the weight loss craze. Friends of mine on these diet pills are healthy and happy but don’t eat much. So Nestlé is addressing that. And Krispy Kreme—next to Taco Bell, my favorite restaurant—is doing amazing things. Krispy Kreme is now selling donuts through McDonald’s, rolling out nationwide over the next couple of years. It’s not “KKD” anymore, but “DNUT”. Donuts are wanted at McDonald’s because their pastries aren’t great.
CHARLES PAYNE: McDonald’s has 30 seconds, my man. You led us into a gray area. You almost got us in trouble. Alright, 30 seconds left. I know you like Advanced Micro Devices. Does that mean you don’t like Nvidia going into the close?
SCOTT MARTIN: Good call. It means that I think Nvidia’s earnings will be okay. We’ve owned Nvidia since about $400 for our clients, so I’m not worried about Nvidia. I think Nvidia will still deliver and bring home the bacon, to throw it back to food. But I also think AMD is one that’s been trashed—its valuation has been hammered and sentiment has turned against it. AMD could lift if Nvidia delivers today. I think they will, and AMD can catch up to Nvidia if sentiment on chips changes with Nvidia’s earnings today.
CHARLES PAYNE: AMD’s been acting really great the last few sessions. Scott, thanks a lot, my friend. Appreciate it. See you now, folks.
