February 1, 2023

Kingsview CIO Scott Martin on Fox News Business Cavuto Coast to Coast 2.1.23

Click here to listen to the full interview.

Program:  Cavuto Coast to Coast

Date:  2/1/2023

Station:  Fox Business News

Time:  12:00PM

NEIL CAVUTO: All right. Let’s get into this right now with Scott Martin Kingsview Asset Management and Lou Basenese I should say. The Public Ventures president, chief market strategist, Lou. The backdrop for this is that the Federal Reserve is meeting and likely raising rates another quarter point when it wraps up its meeting in about 2 hours. I guess the bigger question is, will that do it or is there more to come?

LOU BASENESE: I don’t think it doesn’t. And I actually I’m probably in the 1.1% that believe the Fed is going to raise by 50 basis points. I think a drop down from another one.

CAVUTO: 50 basis points today?

BASENESE: 50 basis points today. And I’ll tell you, look, there’s a great saying from Humphrey Neal, when everyone thinks alike, everyone’s likely to be wrong and everyone expects 25. And I think there’s really compelling reason because the Fed is fighting this. We’re data dependent and inflation is cooling, wage growth is cooling. But at the same time, they’re deathly afraid of repeating history of the 1970s and stopping too soon. And I think they would rather be late on the data side than wrong on when they stop rates. So I’m in the minority. I know that. But I think there’s a real strong possibility. We see 50 basis points today.

CAVUTO: Wow. What do you think of that Scott?

SCOTT MARTIN: Wow. I think it would be crazy for the markets because the market is not expecting that, Neil. But I’d say to Lou, if that’s the case, if we do get 50, does that mean fifties coming down the pike at the next meeting? Because I think the market to your point is expecting a couple more 20 fives and then we’re done and I think that’s what open markets are saying too as far as the ten year Treasury note, which is telling the Fed they need to stop soon.

CAVUTO: You know, guys, yeah, you could make money on this. And Lou just indulge me on this crazy thought that every time every single time the Fed chairman opens his mouth, stocks drop. Because if they’re happy about one thing, you know, I guess he wants them miserable. And so this notion maybe to yours that, you know, a quarter point will be fine, He could surprise him and his comments afterwards could could reinforce that even if he does stick to a quarter point, but telegraphs many more such hikes to come. What do you think?

BASENESE: Yeah. Look, I think tone and tenor really matter here, right? If he does 25 or 50, what is it? What is the statement say? Is there ongoing increases coming? I would tell you the market is a forward looking beast and has gotten a little ecstatic. I mean, we look at the run up yesterday leading into this, the Nasdaq even bouncing off the lows in the year. Right. I think the market’s got a little bit ahead of itself. So there’s risk in the major markets. To Scott’s point. Look, I don’t have a classified document that tells me what they’re thinking for the next one. I know those are lying around everywhere, but know we go 50 here. Yeah, maybe. Maybe my garage in the Corvette. Right. If it’s if it’s 50 here, then I think we definitely taper out after this. I think, you know, there’s a lot of consensus around that. Just over 5% and interest rates, right? Real interest rates. And you’re seeing the impact of that happening. Right. We saw wage and salary growth come back in the most recent data. Inflation is still hot, but it’s definitely peaked. So I think you got to let let that bake in a little bit longer.

CAVUTO: All right. Well, I do have a classified document on the Federal Reserves, the whole thing here, but I might as well share it with the American people. All right. You’re right. The consensus is still a quarter point. Could be half a point. But let me pursue that movement with you, Scott, because then it could have a big impact on wiping out whatever January gains we’ve we saw for this market. Now, not that the January indicator is always right, but it’s mostly right as it goes oftentimes. So goes the rest of the year. How do you play that out?

MARTIN: I would buy it. Neal, If we get a bad reaction today, I would buy any dip because I think you’re right. I think January’s been very strong. It’s been very indicative of what I think is going to be a better year than a lot of people expect and to lose point regardless of what the Fed does today. My friend, we’re going to be done here by June, let’s say, at the latest. So the market will preempt that. It will run ahead of, say, the Fed being done and maybe even cutting rates. My goodness, at the end of the year. So therefore, any dips should be bought, I believe.

CAVUTO: Do you really see and Lou, on this case, I don’t and can’t see the Fed cutting by the end of the year or reversing a lot of this. It could slow the pace of increases. It could stop the increases by May or June, whatever. I know you’re not in that camp, but I can’t see them reversing things. What do you.

BASENESE: Think? Yeah, no, I don’t either. I mean, look, that’s kind of bubbling up as kind of consensus. I think it’s just wishful thinking. I just don’t think the Fed is. The Fed’s not been that nimble ever, right? I mean, they were late to start hiking rates. Why are we going to think all of a sudden on the on the flip side, they’re going to be quick to start lowering rates? I just think, you know, to Scott’s point, yeah, there could be some dip buying opportunities. I think you’ve got to watch out for some of the big tech names. Amazon tomorrow could be really vulnerable on on a disappointment. What we are seeing on our side is strength in the small cap market. Early innovators and in biotech, they bottomed earlier. So that could be an opportunity here. If the big market sell off and you get some dips even in the small end of the market. Small cap. Russell 2000 hit a ten month high recently, so that could be an opportunity for investors. How to play. Powell Like you said, he opens his mouth and stocks drop. So I don’t want to be him.

CAVUTO: Yeah, but.

BASENESE: That’s not a that’s not a track record I want or Scott probably wants either.

CAVUTO: Okay, gentlemen, thank you both very, very much.

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