Kingsview CIO Scott Martin On Fox Business News – Making Money with Charles Payne 8.23.24
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CHARLES PAYNE: In his note this morning, my next guest wrote that, sadly, a rate cut in September appears fully priced in, but the probability of a 50 basis point cut, which seemed almost certain just 10 days ago, has now fallen to less than 50%. I’m going to bring in Kingsview Wealth Management CIO and Fox Business contributor, Scott Martin. Scott, sadly, the party everyone’s been enjoying might be over. You seem worried—what’s going on?
SCOTT MARTIN: Mom and Dad need to come home, Charles, and you have to let them in the front door instead of locking them out so you can keep partying. That’s the thing. I liked what you talked about with Jim Bianco—who won this battle, who won this fight? Charles, the market did, not the Fed. We didn’t reach the targets the Fed wanted when they were raising interest rates over the last couple of years, and even after they stopped. While the economy has weakened to some degree, I think it’s stronger than people believe. It’s stronger than what the data suggests, and the Fed probably knows that, but for some reason, they’re yielding to the markets. I think this sets a dangerous precedent going forward because, as you discussed with Jim, what do you do after that? Do you cut again in November? A few more times in 2025? Then you might have to hike rates again because inflation comes back, and the economy heats up once more.
CHARLES PAYNE: And listen, even the best of them, right? Volcker was a little too early at one point, but after that, he learned his lesson and kept the pressure on the economy until it was clear that the coast was clear. But when it comes to markets, right? You’re a professional investor, and this market does like the news. So, let’s say highs are put in, and we make a new high in the S&P 500. It seems to me that would draw more money in and certainly create a self-feeding cycle for a while, wouldn’t it?
SCOTT MARTIN: It will, but is that the last dollar coming in, Charles? Because now everyone knows what the Fed’s going to do. I think this rally was in anticipation of the Fed’s actions, and they pretty much confirmed it today. So now, the market has to focus on fundamentals, perhaps geopolitical concerns, or maybe the rising costs of raw materials, which will increase as the dollar weakens. There are a lot of factors in play that could change the narrative for the individual investor who might think, “Hey, now that the Fed’s cutting, we can party again. We had our party—what’s the next one? What’s happening tomorrow night?”
CHARLES PAYNE: So with that in mind, it seems like you’re taking a cautious view, but you still really like financials, from what I understand—CMA, American Express, JP Morgan, Comerica—these are big names. Although I will say, last week, American Express got a major downgrade from a big firm concerned about the credit quality of American consumers. How worried are you that a weakening consumer might hurt these financials?
SCOTT MARTIN: It’s somewhat concerning, Charles, but many of their consumers are doing well if you look closely at their business segments. I’m not too worried about that. Plus, with the yield curve steepening and short-term rates coming down, that’s good news for the banks. The banks have been criticized all year about this supposed commercial real estate crisis and their lending practices, but that hasn’t materialized. Now, with the Fed cutting rates to encourage risk-taking, that’s going to benefit the banks significantly. I like them here—Comerica, by the way, is one we’ve talked about on the show for over a year now, and it hit a 52-week high just about 15 minutes ago.
CHARLES PAYNE: Yeah, I noticed that. You’ve been a fan of some of these names for a long time. So before I let you go, are you taking any steps to mitigate risk, or are you just saying, “Let’s not get too excited”?
SCOTT MARTIN: Yeah, not too excited. I think you wait for some down days to make changes, Charles. That means taking profits on the good days and then buying on the down days. I think that’s how this market will play out—you’ll see people chasing the highs and selling at the lows. If you want to make money as an individual investor, you have to do the exact opposite.CHARLES PAYNE: I have to tell you, almost every day, if you look at the top 10 gainers in the market, that’s exactly what’s happening. Half of them are momentum plays, and the other half are bottom fishing. So, I think you’re absolutely right there, my man. Scott, thank you very much. Have a good weekend.
