Program: Making Money with Charles Payne

Date: 5/7/2021
Station: Fox Business News
Time: 2:00PM

CHARLES PAYNE: Want to bring in Kingsview Wealth Management, CIO Scott Martin, along with the managing partner of Veritas Financial, Greg Branch. Scott, you know, how has today’s big miss with this jobs market report, how has it changed the way you looked at the market? Because I think everyone model for a number of months higher than this. So what adjustments are you making?

SCOTT MARTIN: Yeah, I mean, Charles, I like the narrative and the imagery, even talking about baseball-related. I mean, we haven’t seen a swing and a miss like this and say, Rob Dear, one of my favorite baseball players of the 80s was playing for the Detroit Tigers. And so if that doesn’t explain how big of a of a swing and a miss this was today, it does, though, show you that, look, we’re in a volatile environment for data. I mean, Charles, if you look at personal income data, you even look at some of the inflation data, look at the personal savings data. A lot of this data is volatile right now because we’re doing this struggle, this push and pull, as you and Brian talked about, with the government opening the economy or the government seeing helping the economy, if you will, by providing stimulus or actually the economy naturally opening and operating on its own. So the data is going to be in this push and pull environment for me. I think you’ve got it taken for our money. It keeps you in the portfolio we’re managing. You have to take days like the last couple of days leading to this jobs number. You have to take days like we’re going to get in the next couple weeks as we go through the rest of earnings season to buy companies that are down, you know, by on volatility, try to find these companies and get the shopping lists out. And together they’re are going to give you opportunities when things just fall too much. And then that’s when you’ve got to solidify and fortify your portfolios.

PAYNE: Greg, have you made any changes to just your overall thinking since this morning and these numbers,

GREG BRANCH: Counterintuitive as it may seem Charles, this was actually reinforcing for my outlook and actually gave me reassurance. Look, we always knew that there would be a very strong back half story that estimates are too low. And we’re moving up the vaccination curve quick, more quickly than we thought. That’s great for the company earnings. That means that we can have performance without multiple expansion from here as the earnings go up. And so, you know, we had a massive 500000 jobs last report. It was just the other way. And so what this underscores is that these things aren’t linear. They’re episodic. There will be push and pull. But the market is taking a breather, as you saw in the yield on the 10 year, that inflation is going to be less of a challenge than we originally thought a week ago or three days ago when Secretary Yellen was advising of a change.

PAYNE: Well, speaking of Push-Pull, right now, Fidelity has two charts on the last day or so, and I think they’re very intriguing. One overlays the stock market now against that period going into the Great Recession, suggesting that we’re on the cusp of a crash. The other one shows a correlation between the stock market and bonds in the 1960s. This one suggests that we’ve got at least five years left on the rally. So, Scott, which one are you leaning toward the most?

MARTIN: Well, the answer’s somewhere probably in between now. I love these numbers and data that come out and tell you the crash is going to happen Monday or next Friday or June twenty-eighth my birthday. Now, that’s and you can send gifts any time you want. But the reality is this, Charles, we’re going to have these phases. I mean, we’ve had him already this year. We had him a little bit even towards the fourth quarter of last year, where it’s going to feel like this is the big tipping point. This is the tip over. But I believe that we’re in a position where we do have lower interest rates still. Yes, they’ve gone up. Earnings are absolutely awesome. So if we do to the point that was just made, if we do get oh my gosh, some multiple expansion, I’ve told you, Charles, our target could be S&P. Five thousand, believe it or not, because we’re going to get some of the multiple times on that that we need to get there to that level. And I believe also to the fact that the government hopefully will let the economy take over for this thing versus take all the control that they’ve had for the last year.

PAYNE: Greg, I would have posed the same thing to you, but also you mentioned earnings, in fact, the earnings, multiple earnings growing into these

multiples. We’ve got four hundred nineteen S&P companies that reported coming into today. This has been an astonishing earnings season. Eighty-seven percent beat earnings, a 50 percent climb on average. Seventy-seven percent beat on revenue. It’s just absolutely phenomenal. And consequently, the subsequent quarters, the estimates are going through the roof, but it hasn’t been reflected necessarily in the market. Are you seeing, Greg, that maybe this will start to be reflected like, you know, these stocks that didn’t necessarily go up, even with some that went down may turn around and work the way higher because of earnings?

BRANCH: I think we’ll know better in another month or so. Charles, there are two things we need to look out for. One, we do need to see where the inflation is coming out, because if it is a lot more acute than the Fed is expecting, despite the relief we got today, they will have to change their posture on rates, two. We are just coming up on some of those really difficult compares. And I think that investors will wait to see if there still remains a real tailwind, even as people are back to work and back out outside their homes. And so I think the market will need to see that to have confidence that there are some significant tailwinds outside of covid for that to happen.

PAYNE: All right. I’m going to ask you then, a month from now, the same question, but right now we’ve got to leave it there. Scott. Greg, by the way, Scott, give me a give you a shout out in gold, one of the top-performing ETFs this week, one point six billion dollars went into it. You talked about staying the course. It broke through eighteen hundred. Congratulations, both guys. Have a great weekend.