CIO Scott Martin Interviewed on Fox News 1.26.22

Kingsview CIO Scott Martin discusses how the market has reacted to the the Fed’s involvement. He talks about the market now as compared to six months ago, supply chain issues and future earnings in Q2 and Q3.

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Program:  Cavuto Coast to Coast
Date:  1/26/2022
Station:  Fox Business News
Time:  12:00PM

JACKIE DEANGELIS: Meantime, of course, the market’s worried a little bit about the Fed worried a little bit about inflation. How are the two going to come together here? Let’s hear from Kingsviews Asset Management CIO and Fox News contributor Scott Martin and also Ben Ryan, Capital Management founder and president Shana Sissel. Scott, I want to go ahead and start with you because we’re going to hear from the Fed this afternoon, and Sheryl broke it down for us with respect to what the markets are expecting. We’re going to probably see some hikes. Question is how many will see this year? I guess yesterday said, look, it’s already been priced into the market. That’s the volatile swings we’ve seen. What do you think?

SCOTT MARTIN: Definitely priced in. Jackie, and that’s what’s weird to me is I think the Fed does have this lead block, if you will, to use a football term, given how great the NFL’s been the last few weeks is that it has the lead block through the line of scrimmage to have a couple of rate hikes here. And they can say that, but it’s what they do afterwards. And that’s the key point. Jack in the narrative in the conference is that they’ve got to talk about how they’re going to be data dependent, not use words like transitory, which, by the way, they use the word transitory about low inflation before they used about rising inflation back in the day. But we forget about all that. The word transitory needs to be out of there, but they need to be very data dependent, but also somewhat, I guess, forthright about how the market, to my degree into our measurement has overreacted a bit to kind of the Fed’s involvement here saying that there’s going to be six interest rate hikes, maybe eight. Ridiculous predictions. The Fed just has to stay focused on the next couple of meetings and say, Look, we think inflation may be hot for a bit, but with supply chains hopefully easing with maybe the policy get the Federal Reserve being a little bit more attuned to what’s going on versus trying to say that things aren’t that bad or things aren’t really noticeable when they really were to everybody else on the street. That’s something that the Fed has to come out and be a little bit more present about things and just talk about the next couple of meetings versus going out to these wild predictions and saying, this is what we’re going to do for the rest of the year, and this is the way it’s going to be because they’ve been wrong in doing that. And that’s been stuff that’s been really hurting the market.

DEANGELIS: Yeah. And Jerome Powell definitely made some missteps, if you will. He had to walk back that transitory language, and that was really tough to swallow, even though the markets were saying that inflation wasn’t transitory for a while, Shana. But this is a two part situation, right? You’ve got the Fed, it’s got to deal with the low interest rates. It’s got to deal with pulling back some of that money printing. But then you’ve got an administration that’s also spent a lot and planning to spend more, you know, having that conversation with CEOs today saying we want to pass BBB in chunks and it’s going to help you.

SHANA SISSEL: So that’s the biggest problem, stimulus is inflationary. And so the Fed can raise rates. They can make the necessary policy decisions in an attempt to deal with the problems with inflation. But if the administration continues to spend at this level, we’re going to continue to have an inflation problem. It is about the supply chain and what is going on in China is affecting the entire world and the US in terms of the supply chain issues that are resulting in a lot of the inflation. But any sort of stimulus at this point, any sort of additional spending is going to be a headwind to any policy decisions that the Fed makes in an attempt to address inflation.

DEANGELIS: Yeah. Scott, let’s talk about the fundamentals of the market a little bit because we’re, you know, getting into earnings season here and we’re getting, you know, mixed results from from different kinds of companies, depending on how they’re dealing, navigating the challenges. Obviously, technology has been an area that’s been a little bit weak the last few days and expectations of these rate hikes to come. Your thoughts on on where companies stand right now, dealing with all of these problems? I mean, it actually feels like things are OK. On the fundamental side, they’re OK.

MARTIN: They’re not as good as maybe they were six months ago. But that’s not a bad thing because six months ago, we’re in still the V-shaped recovery. So things looked pretty in a word. Awesome. Jackie, I think as CEOs of a lot of companies out there, whether it’s Kimberly Clark, Microsoft and so forth, Schlumberger recently Corning, it’s a really tough spot right now because you’re coming out with earnings and you’re probably having a good quarter to report for Q4. But going forward, my goodness, the projections are really tough because you don’t want to over predict and overpromise and then absolutely fall flat on your face. But given the pullback and a lot of these stocks and a lot of stocks, mind you, that we own Jackie, that we still like and we’re still adding to here. Gosh, given the pullback, you kind of have a little bit of a of a chance to say, you know what? We’re a little uncertain about things going forward, so it gives you a pause or two to deliver maybe better results and expected on those subsequent quarters once those come. So the visibility is really tough. As has said, it depends on what your policy is out of D.C. and how that affects inflation. Supply chain issues, we’ve got to get these things worked out because otherwise, I think it leaves a lot of the future pretty murky when it comes to future earnings in both Q2 and Q3, which, by the way, really quick have tough comps now versus twenty twenty one coming up.

DEANGELIS: Yeah, that’s a really good point. Guys, we are going to have to leave it there. My thanks to both of you.

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