Program:  Cavuto Coast to Coast
Date:  3/16/202
Station:  Fox Business News
Time:  12:00PM

NEIL CAVUTO: All right. It’s currency has shot. Its markets have yet to open and they had already crashed. It’s tough to get money there. It’s tough to take money out of the country there. And now word that Russia could be on the brink of default by missing or allegedly missing $117 million interest payment on some government notes that was due today. Now, we’re learning from some Russian financial officials that that didn’t happen. They made good on that. The reason why I stress this is if you don’t make good on interest payments and your government, you’re in default. It’s as simple as that. And the Russians don’t want that added to all their problems. It would be the first time something like that has happened since the Bolshevik Revolution. So we really don’t know. But I want to go to my friend Scott Martin of Kingsview Asset Management. I’m hearing about this development, Scott, and then I’m looking at Tesla halting a $1 billion bond offering. And I’m wondering if it just feels the conditions are not right for any type of bond offering and it’s tainted by association, even though there’s zero association. What do you think?

SCOTT MARTIN: Yes. Strange things are afoot at the Circle K or in this case, the bond market. And I’ll tell you, Neal, a couple of things to just pass apart here. The Russia deal, which is the odd hey, the checks in the mail type of excuse probably isn’t going to work here because we know what’s going on with Russia. We know the kind of actor they are, and certainly they just don’t probably care either. So with respect to Russia, though, going forward, it’s probably good to get aligned with some of their creditors because of the fact that they’re going to need credit going forward to rebuild their country if they so desire. With regards to Tesla, I don’t think it’s as bad for Tesla in the sense that it was $1,000,000,000 issuance. Neil They’ve got a couple, probably about 15 billion or so on their balance sheet of cash. They’ve got another 18 or so billion they’re going to bring in this year. So not that big of a deal. And don’t forget, we’re in a rising interest rate environment. So when you’re issuing bonds in an environment where rates are going up as much as they are, you want to interest and issue bonds, rather interest rates that are higher than what they are in the open market, or at least not say going up against you. So therefore, they probably are going to wait until interest rates come down to reissue those bonds and therefore get the credit flows back that they need.

CAVUTO: You know, Scott, I worry, though, about the compounding effect of this. I mean, if companies then feel nervous about, you know, making a bond offering, we already know a good number of companies have put off initial public offerings, those that wanted to debut in this environment. They’re saying, you know, we won’t debut now. And it does tend to feed on itself, doesn’t it?

MARTIN: It does. And it also tells you kind of the environment we’re in where everything’s very skittish still. I mean, even after the Fed did what I think was a pretty good job yesterday, the markets are still a little bit in the figure it out kind of phase. But with respect to the debt issuances, Neil, that have happened really over the last six to say seven years, we’ve had other bond issuances delayed like this, like Tesla. So it’s really not that arcane to say this situation. But you’re right. I mean, some companies need debt more than others. I think Tesla doesn’t need it. Me and say as much as some of these other companies like Snowflake and some of the other ones that maybe aren’t making as much money, Teladoc and some of these other guys. So therefore it’s about need maybe more than want. And therefore Tesla, I believe, can be patient here.

CAVUTO: Do you ever worry, though? Sure. You have to worry about everything. You have clients and all that, and you have to look everywhere. The idea, the contagion, I mentioned it now with the House considering still more sanctions on Russia by removing its favorite trading status, which would invariably bring on tariffs and the like. And we already know that some Russian financial institutions that are on their last leg, a lot of people asking just how much exposure do our banks have to that region? Even in Citigroup’s case, you know, it’s a significant amount of money, $10 Billion. But, you know, they have 2 trillion plus in assets. So I wonder if it feeds on itself the perception that the good and the bad alike are caught up in a selling wave if it materializes to be a problem.

MARTIN: Yes, the bad feeds on itself. It feels like more than the good these days. And you’re right, Neil, I do worry as a money manager, as an investment wealth manager, we worry a lot just because we have to risk manage at the end of the day. I mean, I scream myself to sleep at night most nights. But with regards to the contagion, we’ve had a couple of dry runs here, though, haven’t we? We had the Brexit scare some years ago. We had the Greek debt crisis before that, and my goodness, there was never really a huge spread of contagion. Yes, there are some banks that closed, some banks that got taken over, some banks that had to liquidate their assets. But we’ve kind of been here before. And so this incident, while it is scary and it does have the potential to spread, I don’t believe it’s going to be any bigger than those other two, which really weren’t that big of a deal overall.

CAVUTO: Yeah, you’re right about that. You know, if you just it’s a spring like reaction of spring to selling. But but bottom line. And you just stayed calm. You got through it. So we’ll watch it very, very closely. None of this has really materialized yet, to Scott’s point, but we are watching it. Thank you, Scott, very, very much.