March 20, 2024

Kingsview CIO Scott Martin On Fox Business Your World With Cavuto 3.20.2024

Click here to listen to the full interview.

NEIL CAVUTO: Scott Martin takes a look at how the market responded to all of this. They like it. Did they get ahead of themselves? What do you think?

SCOTT MARTIN: Surprisingly sanguine to me, Neil, and I love this setup that you always do so well, my friend. Which is the Fed is still likely to cut rates as they said. But how much, and this is a market, Neil, that we’ve talked about all year, that was expecting what? Six cuts. I even saw eight at one point, which would be incredible. And now we’re down to three, possibly two. I’ll tell you what, boys and girls, the best thing here that the market should take away from today is there are no cuts coming. I know that sounds crazy. I know people just fell out of their chairs and probably ran off the road. But that also means there are no rate hikes coming. The market and the economy do best when the Fed is out of the picture. When the government’s out of the way when rates are flat, as in they’re not going up or going down. That’s what we need. And I think that’s what we heard today.

NEIL CAVUTO: Alright, now it’s in the eye of the beholder. I get that all the market averages were up into record territory again, and this seemed to be the fuel behind it. The Jerome Powell saying they agree on this much, that we’re not going to have much more worrisome inflation. Of course, they did not see some of the inflationary pressures that already been building that could delay these guns. But I’m going to look at the half-full glass here. The fact of the matter is that the overnight bank lending rate known as federal funds is right now at around five and a quarter to five and a half percent. This is the second anniversary of the first rate hike by the Federal Reserve. So interesting on this day, the signs that it could reverse, you’re just saying not quickly enough.

SCOTT MARTIN: Not quickly enough, and I don’t think that’s a bad thing. And one anniversary to celebrate or not celebrate my glass, Neil, is three quarters full, as usual as you can expect because of the fact that the market will handle rates here. I know it doesn’t feel great, boys and girls, because we had erp, what’s called zero interest rate policy for what felt like a decade after the financial crisis. Not awesome. We couldn’t find inflation anywhere. There was deflation on every turn. Now we have a little bit of inflation because we have a little bit of economic growth and a heck of a lot of demand. The thing I’m worried about is the administration, whoever’s in DC, the way to get inflation handled is actually by lowering taxes and lowering regulations so people can produce more stuff to settle the consumers not raising taxes, not regulations, which is something that I think the Fed chairman knows as well.

NEIL CAVUTO: It makes his job more difficult. You talk about Jerome Powell, the Fed chairman, because as he and his buddies are trying to get a lid on inflation, the thing that really causes it more than anything else, government spending goes unabated here. So it’s sort of trying to put out a fire and one bucket goes into one room and the other is lost in another room and you’re just repeating the same cycle. So I guess what I’m asking here is the political message might be, alright, this is a sign that maybe the worst of this is over, but if you start spending more, you’re going to be right back in the toilet.

SCOTT MARTIN: Bingo. Toilet’s a great way to put that. That’s a good euphemism for some other things. And it’s kind of like Neil, like you said, a fire that’s being fed by gasoline and putting it out with a glass of water. And that spending is exactly coming from the government. All this spending that they’re doing to help the economy, help businesses, help the consumer. How about you guys? Get out of the way. Let us spend our own money. Let us invest our own money and therefore that will take care of itself. And so what if we get a little inflation out of it? It’ll be better getting the economic growth that comes behind that.

NEIL CAVUTO: Scott, always great catching up with you, my friend Scott Martin. Following all of that at Kingsview Asset Management, CIO.

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