Kingsview CIO Scott Martin discusses pullback and the bond yield story.

Program: Making Money with Charles Payne
Date: 3/19/2021
Station: Fox Business News
Time: 2:00PM

CHARLES PAYNE: And then there are US taxes. Yes, they are going up, but more than likely they’ll be held in check by some of the same forces that curb the more egregious proposals that could have really slipped into that last rescue package. I know the progressive wish list is frightening, but moderates are now flexing their muscle and pushing back. But the changes and who could see higher taxes from individuals earning four hundred thousand to households? That’s a tough one, folks. It’s a hard bombshell to swallow. Now, maybe overall I’m being too sanguine. So, let’s get the read from Laffer Tengler Investments Chief Investment Officer, Nancy Tengler, Kingsview Wealth Management CIO, Fox Business contributor Scott Martin and Wealth Enhancement Group Senior Vice President Nicole Webb. Nancy, you know, listen, I know the market buys right now still to the downside, but I don’t see where the big risk are. I’m feeling like now’s the time. You know, we always talk about buying the dip. Now’s the time to start looking to buy that dip. What do you think?

NANCY TENGLER: Yeah, Charles. I mean, we’ve been waiting for a correction. We may have gotten it in the Nasdaq, but if you look at what’s going to drive this market forward from here, it is going to be continued strong economic data and earnings. So, we think you buy the dips for a while. It’s not a forever strategy, but we’re pretty bullish and we sort of see this market is more analogous to the 1990s productivity driven growth than most recent years.

PAYNE: You know, Scott, I know buy the dip is not forever, but it’s worked pretty good since March of 2009. Now, of course, I’m not one of those guys who wants anytime everyone comes on and we’re down one percent, I’m asking if you’re buying a dip. But to Nancy’s point, the Nasdaq certainly looks like it’s run its course. What do you think?

SCOTT MARTIN: Yeah, fifty percent of the time, Charles. It works every time. And I think in this environment, like Nancy said, that’s what you need to do. I mean, that’s the weird thing, right? It’s like, you know, as investors, a lot of us were chasing these crazy stocks from last year. And I’m talking about the Zoom’s, the PayPal’s, the Squares, the Docusigns, the Invidia is the Teladoc, the Pelton’s. I mean, that could go on and on. And they weren’t pulling back, but everybody kept piling in. And so finally, we’re getting some pullbacks, not we’re getting what in our estimation is an overreaction to the 10-year Treasury note going up in yield. As you said, Charles, and I quote, the yields will go up. I mean, they do that in times when we’re going to have better economic recovery ahead. So when you get the gift, Mr. and Mrs. Investor of a pullback of twenty five, thirty five, maybe even 40 percent in some of the names I mentioned already, those are times when you’ve got to go in and hold these things for the next six to 12 months.

PAYNE: You know Nicole, it’s so interesting because for the for the last half of last year, there were a lot of skeptics out there who pushed back on the notion that we were in a V shaped recovery. Those same voices are now saying the recovery is too strong, it’s too strong. So, help me out. Are we going from here?

NICOLE WEBB: Yeah. You know, to piggyback on what Scott and Nancy just said, I think the rest of the year has a rosy outlook, a lot of optimism, a lot of money. We keep hearing the narrative about all the cash on the sidelines. There are a couple of risks that will create buying opportunities in the short term. And I think one of those is the lockdown’s that we’re seeing in France and Italy right now. And so that might create a little bit of uneasiness in the U.S. markets in the weeks to come. You know, additionally, I think one of the concerns that we’re going to hear brought forward is we really have great consumption numbers. So even if we go back to full employment, where does the growth come from? And so, you know, well, I do think that this year is going to be a buy those little dips you just heard. It is great advice; I think continued uneasiness until we do normalize interest rates. But at some point, they will. And so investors have to be quickly

PAYNE: Nicole let me jump in for one second. What about things we just absolutely could not do over the last year? I mean, certainly airline tickets or airline sales will go up, concert sales will go up. I mean, there are some unique things we could spend money on that we couldn’t spend money on for a whole year.

WEBB: Absolutely, and I think we’re all chomping at the bit to get back out there. We’re just waiting for the A. OK, let’s get going. And I do think there’s still value there. You know, I do also think there was a simple pause this week in the oil markets. And as we talk about that, get out of the house, return to travel, you can return to that normal consumption. You know, those fun days ahead are going to be profitable for this economy.

PAYNE: Put me down for every concert, if you know a show. Let me know I’m going, by the way, today

MARTIN: I’m playing.

PAYNE: FedEx is the big winner — Let me know– anyone, And Scott, I’m with you. Buy an extra ticket. Buy two. I’m telling you. Now, today we were reminded that earnings do matter. FedEx has some strong numbers, strong guidance. And Scott, I want to go back to you on this because Nancy just referenced it. What about earnings? Right. There was a time when earnings were the main thing, particularly guidance. The mother’s milk of stock markets, I think, is going to matter more than bond yields going forward.

MARTIN: It might I have this concern, though, Charles, because it’s just a better headline right now, that the bond yield story is going to overshadow maybe the next quarter of earnings reports, which frankly, is so funny. I mean, it’s right around the corner. I mean, April’s knocking on the door here. So, April, May, I still believe the headlines are going to be dominated by, oh, my gosh, the ten years at two percent like everybody used to freak out. So, we’re going to lose a quarter, I think, Charles, of that earnings potential, the earnings attention that it deserves. But what’s going to happen is. If you’re an at home investor and you’re missing some of those great indicators, you’re going to be left holding the bag of these interest rate scares and not paying attention to some of these great earnings out there, which by the time they actually do show up in the market, does turn its attention there. It may be too late to get into some of those stocks that have shown up so well in next couple of months.

PAYNE: Nancy, That’s a really interesting aspect about today’s session. First of all, the VIX is getting hammered, the VIX is down. We’re near the lowest point we’ve been in a year, the so-called fear index. So, bond yields have rocketed higher. That means value stocks should be up. No growth is rocking today. What is what is the message of this market for you, Nancy?

TENGLER: Well, day to day, it’s kind of head snapping. But for us, like Scott just said, we’re using the opportunity. The weakness is an opportunity to add to techs. We don’t think the tech story’s over. And I’ve said that on your show many times. We’re not buying growth at any price. We’re buying growth at a reasonable price. And our favorite investment theme is where consumer, which Nicole was mentioning, and it will be robust, where consumer meets digital and that those are some of the names that that we really look forward to add and weakness.

PAYNE: Well, today, Etsy is the number one performer in the market would that qualify?

TENGLER: That’s not one we’re watching. Unfortunately, it’s a little too lofty for us still. But other names like some of the traditional restaurants, Starbucks is.

PAYNE: I got you, I understand. That’s Williams-Sonoma. They reported in the digital. The e-commerce was 70 percent of overall revenue. And that stock is taking off like a rocket. Nicole same question to you… Do you find it intriguing? For the last five weeks, investors were told yields up growth down. Today, yields have rocketed higher and growth names, {INAUDIBLE} communications services through the roof.

WEBB: No, I, I, I think that growth is here to stay. And that story continues and the ecosystems are so sticky. You know, I think it’s going to be this conversational shift from work from home to cloud technologies. You know, I also think it’ll be really interesting and again, create buying opportunities when you’re sitting there watching these shifts, knowing very well that technology isn’t going anywhere, that this is disruption caused by changes in interest rates that will normalize. In addition to that, we’re going to we’re going to hit the one-year anniversary of the market lows in March. And I do get curious if we’re going to see some of that some of these momentum investments starting to pick up a lot of value as they rebalance and so picking up a simple value ETF may have a lot of tailwind in it in the weeks ahead. And I think that could be interesting. But again, it may also trigger that that buying opportunity.

PAYNE: I like what you said. The tech isn’t going anywhere. Imagine if we didn’t have tech. I could be doing this show from the house. All four of us would have a string and a cup and we’d be trying to get this thing done. Scott, Nicole, Nancy, thank you all very much. Appreciate it.