March 2, 2023

Mario Veneroso on Fox Business Mornings With Maria 3.2.23

Click here to listen to the full interview.

Program:  Mornings with Maria

Date:  3/2/2023

Station:  Fox Business News

Time:  7:00AM

MARIA BARTIROMO: And it is time for the word on Wall Street. Top investors watching your money. Joining me right now, retail advisors president Stacey Widlitz and Kingsview Asset Management partner, Mario Veneroso. Great to see everybody. Thank you so much for being here. Stacey, kicking things off with you on a week that has given us lots of mixed performances in retail futures this morning. Mixed Dow Industrials up 89. The Nasdaq down 50 right now. And we just saw Macy’s report a double beat earnings and revenue better than expectations. Also forecasting full year sales, though, below street expectations signaling growth is slowing down the road. But Stacy, look at this stock. It is up 12% right now on the Macy’s quarter. Your take on earnings season and Macy’s. Is this a macy’s story?

STACEY WIDLITZ: Yeah. So, Maria, you know, it’s interesting because so many of these stocks are so beaten down and expectations have been so low. So, you know, you’ve seen a lot of these stocks miss and still rally. You know, so I’m not surprised that Macy’s is is rallying here despite very muted expectations. But I think really, you know, it’s a bit surprising because we’ve heard a lot about the destocking in the wholesale channel department stores. They have too much inventory. So it sounds like their quarter was good, but expectations, again, a bit muted. But I think it’s very much right now about value. It’s TJX Ross stores. It’s one stop shopping. It’s we can go to get our food and our clothes and all of our needs, our beauty needs. It’s target, which was slightly better than expectations. And even some green shoots in the apparel sector. American Eagle last night reinstated their dividend. Inventories are coming down nicely. So I think it’s a it’s a decent setup with low expectations and inventories back under control going into 2023.

BARTIROMO: Do you still expect a recession this year, Stacy?

WIDLITZ: You know, I think that it’s it’s a possibility for sure. But I think the consumer has always taught us that it’s incredibly resilient here. There are some signs that you have to be concerned about, which is people are spending more on credit. Obviously, we’re hearing that we heard that last quarter from Best Buy who’s also going to report today. So I think, you know, we we’re concerned that consumers are getting ahead of themselves and perhaps increasing debt again and then we get into trouble six months down the road.

BARTIROMO: Well, Mario, one of the reasons for the strength of the consumer is jobs, right? We’re seeing all of this job creation every month. And yet Alphabet’s self-driving tech company, Waymo, cutting jobs, adding to the other string of job cuts we’ve been talking about. Waymo will cut nearly 140 employees. This is the second round of layoffs this year. That is a cut of 8% of the workforce. The stock is flat this morning. You’ve also got Ray Dalio’s, Bridgewater Associates also cutting jobs. They’re planning to cut 100 jobs as part of a push to develop AI and a new platform. They’re both companies laying off in efforts to focus on AI. Mario, what’s your take on the jobs picture? Will it catch up with what has been a slowing economy?

MARIO VENEROSO: Yeah, so I think the jobs picture right now, if you look at last month, they said 517,000 jobs versus 187,000 expected. So the jobs picture has been the golden parachute for the Biden administration and for this economy. But I believe that golden parachute is about to be shot down like a Chinese balloon. You have Waymo yesterday, 8% of their workforce, they’re being laid off. You have Bridgewater’s report that came out last night, another 8%. You have Salesforce. They’re laying off 10,000 employees, Maria, 10,000. So it’s only going to be a matter of time before it works its way through the system. And as an investor and as a money manager, if you look at the jobs report, it’s a lagging indicator. I think we’re going to start having more and more of a harder landing upon the horizon.

BARTIROMO: One of our guests earlier said that the lag in terms of impact from this string of interest rates is 12 to 18 months. It’s not it’s not even just a year. I was thinking maybe it’s a year lag. He’s talking as much as 18 months. So if that’s the case, we haven’t felt any of this.

VENEROSO: Yet, 100%. So if you look at history and they often say history doesn’t repeat itself, but it often rhymes. It’s usually about a two year barometer for the Fed with their tightening cycle to start moderating their interest rates. So what happened last year? We went from 0 to 4 and a quarter interest rates. The Fed funds is four and one half right now. It’s going to take some time. And I agree with Brian Moynihan, who recently said that you have to give the time for the structure to work. And I think there could be more volatility ahead.

BARTIROMO: Would you buy stocks here?

VENEROSO: So it depends on the investor and your time horizon, right. So there’s certain sectors. You know, David Einhorn said yesterday, right, there was bubbles brewing in the market in 2022. You saw the Nasdaq go down 33%. So I’m a disciple of discipline. I like value. Maria. I want to get paid now with cash flow, strong dividends. And I want those companies to raise dividends in the future. So the answer is yes, but I would be very selective.

BARTIROMO: Stacy, you agree with that? You like value over growth.

WIDLITZ: You know, I think there are some names in retail particularly that you can look at for for growth here and think we’re we’re headed into a major reset. Right. Last year we had way too much inventory and now everybody’s paring back. So you can see some operating operating margin growth here and in the out years, certainly there are some names like a Target, certainly a Walmart brands like Nike you can absolutely own for growth here for multi year period. Okay. I think the best brands out there, we’re going to go into a period of stabilization again in the operating margin cycle and then return to revenue growth. I think, you know, you certainly want to avoid stocks like a Kohl’s that are less relevant now. They don’t have the one stop shopping, they don’t have food, they don’t have consumables and becoming less relevant. I think those you don’t want to really look at them and say, wow, cheap multiple interesting here. I would avoid those.

BARTIROMO: Yeah. Which is your point. You’ve got to be selective in this environment. Stacy, Mario, great to talk with you. Thanks very much. We appreciate it.

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