- 2024-08-01
- Posted by: kimsite
- Categories: Commentary, Insights, News
Click here to listen to the full interview.
NEIL CAVUTO: Alright. There is a reason I am showing you a split screen of the Dow tumbling almost 500 points today and where a lot of that money was going as all of this careening was happening. It was going into bonds, treasury notes, and bonds on the notion that a lot of people wanted to protect their money. Now, the more money that flows into bonds, the lower their yield goes, and it reached almost a one-year low today, trading at around 3.97%. Mortgage interest rates also slid today, now at around six and three-quarters percent. I only mention that because it could be the secret ingredient to getting this market turned around. The fact that interest rates are now so low, regardless of what the Federal Reserve does, market rates are coming down on the expectations of a slowdown. Some would say worse, but money did find a safe haven in US assets, and that could indicate a bunch of things to come. It’s too early to tell. I want to go to Scott Martin, who’s a great read on these things. I wanted to represent that half-empty and half-full glass, but what do you make of the interest rate tumble?
SCOTT MARTIN: Neil, I defer to you. I mean, do you even need me for this interview? I agree with you a hundred percent. It’s exactly that. It’s money. I’m telling you, we could just quit it right now. I need you too, but I’ll tell you what the market needs, Neil: some calm. It needs some good earnings, which we’re seeing after hours, sort of. And also, you’re right. You made a great point. Safe haven assets, Neil, are actually working, my goodness, like safe havens: things like gold and US treasury bonds, which are still some of the best safe havens in the world. I don’t care. Buy some Russian bonds if you don’t believe that. There’s also an issue with the market being in this risk-off mode, so you’re going to see flows into those safe haven assets at least while things get sorted out on the earnings front.
NEIL CAVUTO: What I didn’t understand early this morning is these numbers that were coming in got Wall Street into this selling pickle. They were not awful numbers: a slowdown in manufacturing, a slowdown in home sales activity. I get all of that, but they were nothing so incredibly unique that they’d say, “Okay, that’s an instant recession.” My point is that I’m not smart enough to know, but why the reaction it got?
SCOTT MARTIN: There you are trying to disarm me. And I love pickles as well, and the market is in a pickle because, I think, Neil, we’ve come to this point. I mean, here it is, August. It still feels like mid-year. It only feels like an eternity this year where the market has been on kind of this easy street flow. I mean, things have been good and bad, and there’s been all kinds of political jargon. There’s all kinds of geopolitical problems out there. There’s all kinds of Fed worry out there that they’re not going to cut rates, which I don’t think they should, by the way. I’m still staying on that tip. But there’s really the realization, Neil, that markets go up and down. Markets are volatile by nature, humans are emotional by nature, and they’re investing. So, things go up and down, and when there’s nasty news out there, there’s a reason to sell for anybody out there.
NEIL CAVUTO: Did it get overextended though with technology, for example? There was a point today where Nvidia shares were up almost 10%, and then before you know it, they turned around to down an excess of 6% last time I looked. But the bottom line is, it was a 180. And the reason why I mention this is that technology is sort of taking it on the chin all over again. Yet we get split reads. Amazon comes out with a report that was okay, a little disappointing to some; it’s selling off in after-hours. Apple, very different kind of report, coming in better than expected in both sales and earnings, and it’s up in after-hours. What do you make of the magnificent seven that aren’t looking as magnificent?
SCOTT MARTIN: Not today. They aren’t on some of those days. Neil, you need to hide your eyes and put the women and children to bed because some of these days are rough to look at if you’re looking at your stock portfolio daily. Unless you’re trading every day or after-hours like some of us are doing now, don’t look at it every day because these are long-term investments. Apple, Amazon, Tesla, Google, Microsoft—those names should be in your portfolio. They’re in ours for our clients because of that long-term focus. These are companies that are changing the economy and our lives daily, so yes, there are going to be some shifts in the performance of those stocks daily. But long term, as you’ve seen from some of these earnings reports today, these companies are doing very, very well and succeeding at what their business occupations are.
NEIL CAVUTO: Yeah, and August is a problematic month. We know that. A lot of the attention is on it, but August is usually that month. Scott, thank you, my friend. Always great catching up with you on this.
