Kingsview CIO Scott Martin on Fox Business Your World With Cavuto 5.22.2023
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Program: Your World with Cavuto
Station: Fox Business News
SANDRA SMITH: Well, it could have been worse. The Dow did drop today, albeit a small drop ahead of another round of debt ceiling talks scheduled for just a few moments from now. As we mentioned, Treasury Secretary Janet Yellen just sent out a new letter to Congress tripling down on June 1st as the earliest possible default date. That is just ten days away. Hold on. Are we already looking, June, right around the corner? Let’s get the read from our money panel. Scott Martin of Kingsview Wealth Management and Frances Newton Stacy from Optimal Capital. Great to see both of you. I don’t know where the time goes. Scott, I’ll start with you first. So what are markets telling us about what’s about to happen here?
SCOTT MARTIN: Well, time is moving fast, Sandra, for both of us. June is my birthday month, too. So if the government ruins that again, I do that on my own. Typically I’ll be upset. What’s interesting, though, is the markets are pretty laissez faire about this. And I think it’s Sandra, because this is your typical political theater. It’s your typical scare tactics by the government to, I guess, scare everybody into thinking there’s going to be this big disaster when in reality the cows are going to come home to roost and we’re going to come out with this big deal in the 11th hour and they’re going to say, hey, Mr. and Mrs. American, this is the government working for you. We figured it out, but we kicked the can down the road to the next time when we tell you we’re going to get your fiscal house in order and they don’t.
FRANCES NEWTON STACY: That’s a good point. Scott. Happy June birthday. Thanks. But anyway, no, the problem is, is that the political jiu jitsu has wider reaching consequences. And the thing is, is that it’s very important not to let the US default for a couple of reasons. The credit rating agencies could lower the credit rating in the US. That doesn’t really help us in our negotiations with China and in the larger field of negotiations between the BRICS countries and the NATO countries. As each of those tried to appeal to smaller countries, it weakens the US dollar and I think that they should get it done. But as Scott said, they should get the fiscal house in order. There does need to be reform, there does need to be restructuring. We are way too high when it comes to the debt to GDP and the overall debt to cash. But that can’t happen before this debt ceiling occurs.
SMITH: All right. What’s at stake for the general market, which seems to be sort of taking a wait and see approach? I think that’s fair. But Scott, what’s at stake for the average American consumer who’s still dealing with this inflation, racking up credit card bills, interest rates are going up, the US housing market’s taking a hit. What’s at stake for for the average, hardworking American?
MARTIN: Well, that’s all of us. And I think it’s more uncertainty. But here’s the weird thing. Remember the last time we had an issue like this with a debt downgrade, rates actually went down, boys and girls, bond prices went up, as you know, Sandra, from trading in the pits. I mean, it was the weirdest thing that happened when that happened. And then also we had about what, an eight year bull market after that as well. No inflation after that, too, with rates on the floor. So the outcome could be questionably bad. I mean, possibly not bad and maybe questionably good in the sense that it might not be that big of a deal.
SMITH: But thar was a Debt rating downgrade, that wasn’t a default.
MARTIN: Well, right. But they still fake the default. I mean, the default was still going to come down the line. It was like, oh, the the credit ratings downgrade because you guys are going to default.
SMITH: Frances get the last 10 seconds birthday boy.
STACY: Go ahead. Okay. Yeah. Well, the market also sold off 20% in the wake of that, Scott, even though it recovered it.
MARTIN: It was a buying opportunity.
STACY: All right. So anyway, this market hasn’t priced in a default and that will cause a sell off.
SMITH: Oh, there you go. All right. Prediction made. Thanks to both of you. And we’ll. Happy birthday you later, Scott. All right.