- 2023-09-25
- Posted by: kimsite
- Categories: Commentary, Insights
Click here to listen to the full interview.
ASHLEY WEBSTER: Well, take a look at the markets trying to kick off the final trading week of September. On a positive note, lots of green, but it’s all very modest. All three major indices on pace, though, to have a negative month. The Dow falling over 2%. The Nasdaq plummeting over 5%, as you can see, almost 5.5%. Let’s get the latest read from Kingsview Asset Management CEO Scott Martin. I haven’t talked to you for a while. Scott, Great to see you forever,
SCOTT MARTIN: Ash. Looking good.
WEBSTER: So look. Yeah, look at this, Thank you. You too. Listen, the month of September has been pretty poor. We also have a lot of headwinds coming at us. Of course, we have the UAW strike that could expand. We have perhaps student loans being repaid that could hurt the economy. We have all sorts of things going on out there. Government shutdown. Where do we go from here? Because there’s a big wall of worry.
MARTIN: Yes, it’s going to be a volatile ride, actually. People always historians, especially throwing that October is not a good month either because of the crash of 87 and some other things. So there’s a lot of push and pull here in the markets. But as a money management manager, Ashley, as an investor, myself as one as a steward of client money, this is exciting for us because this is times when the market presents opportunities. When volatility starts to kick up, stocks overcorrect to the downside, meaning prices go too far down and then we get set up. What I think is going to be a nice say back end of fourth quarter rally once maybe we get past October, past some of the notions that you mentioned earlier with the slowdown shut down strikes and so forth. And then we get into an economy actually that has the Federal Reserve that finally gets the point here that they need to lay off and stop the interest rate hikes for a little bit and let the economy grow, let interest rates stabilize and let the consumer continue to be strong.
WEBSTER: So it begs the question, Scott, where are some of those opportunities in your mind?
MARTIN: Great question. Very good question at that, actually. And that’s where I think it’s really the interesting part for investors as we speak to a lot of clients on a daily basis, it’s things that don’t look that great right now. It’s things that have not done very well this year, looking at, say, oil stocks, looking at energy stocks in an integrated, integrated part of things. Also looking at financials, actually, these are all companies and stocks that have not participated in the upside so far like tech has. And we still like tech here, but it’s time to take a few chips off the table and start buying some things that have been laggards this year because as the volatility does kick up, those names will hold in there very well and they’ll be part of that next rise up.
WEBSTER: But, you know, as long as the Treasury yields, especially that ten year, which is a benchmark, really is above for 4.5%, it’s difficult, is it not, for especially those growth stocks like Tech?
MARTIN: Yes. And it feels strange to seeing those numbers. We just put up almost 4.5%. They’re up eight basis points today. It’s scary stuff. But the reality is this is more of a normal level. Ironically, if you look back in history when we’ve had a growing economy, when we’ve had consumers strong, we’ve had high employment like we do right now, there’s a reason that rates are up here. And I think the Fed has done a fair job, not a great one, but a fair job, and realized that inflation was not something that was transitory. It was something that needed more work. But we’re getting towards the end of that tunnel, Ashley, when it comes to the Fed stepping out. We’re going into an election year next year already, and so we’re already going to start to see rates start to stabilize. And when rates stabilize, they don’t necessarily need to go down. But when rates stabilize, that’s when stocks do the best.
WEBSTER: But very quickly, Scott, are you concerned about the consumer? It’s such a consumer driven economy almost, what, two thirds, 70% people are racking up debt. The housing market is kind of stumbled and is not in great shape. Is that a concern?
MARTIN: It is a little bit here and there. However, the consumer is very bifurcated these days. Ashley, There’s a consumer that’s doing very, very well and better and better and a consumer, unfortunately, that’s doing worse and worse. And so you’re starting to see that split. But if you look at the breakdown of the consumer numbers, some of the borrowing numbers are a little bit scary. The cost of interest, the cost of leverage is going up, but that should stabilize. That should be a little bit more predictable going forward. And two, if you look at where the consumer numbers break down and where a lot of that spending is, a lot of the high end consumer, as they have before, Ashley, are the ones that keep this economy going. And I believe they will do so here.
WEBSTER: Yeah, remarkably resilient. We’ll have to leave it there. Scott. Scott Martin bringing the energy on this Monday, as you always do. Great to see you.
MARTIN: Good to see you.
WEBSTER: Thank you so much for being with us.
