Kingsview CIO Scott Martin On Fox Business News – Cavuto Coast to Coast 9.18.24
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NEIL CAVUTO: Sheryl Crow probably had no idea that this would be the theme for Fed Day and that her song would be appropriately targeted for today. Now, the first cut isn’t necessarily the first cut we’ve seen in four years, but how deep it will go is anyone’s guess. The battle is between a quarter and a half-point. A lot is at play. Let’s go to Thomas Hayes, the chairman and managing member of Great Hall Capital. We’ve also got Scott Martin back with us from Kingsview Asset Management. So, guys, let’s get into the basics. What do you see happening in the next couple of hours? Scott, I’ll start with you.
SCOTT MARTIN: Well, Neil, I think the market is really dictating what’s going on. Unfortunately, in my camp, we’re looking at 25 basis points. Personally, I think they should do absolutely nothing, like that episode in Seinfeld. Therefore, I believe they’re making a mistake. But if you look at where the market is, it seems to be pushing the Fed towards a 50 basis point cut. As we can see from the graph on the screen, why don’t we just get this over with? Let’s do the 100 right now, rip the band-aid off, call the economy “stinky,” try to manipulate the election, push the consumer to over-leverage, and get the housing market going again. Let’s just get it done in the next couple of hours.
NEIL CAVUTO: Alright, I don’t know what you’ve taken this morning, Scott, but whatever it is, I’d like you to share it. Thomas, what’s your take on this? The quarter-point cut seems to be the consensus, but as Scott so eloquently put it, if you’re going to make a big move, now is the time. What do you think?
THOMAS HAYES: They could front-load, but they won’t want to admit they’re behind the curve, which they are—by about 200 basis points, too restrictive. They also don’t want to imply they’re interfering with the election. So, we’ll likely see 25 basis points, with some dovish talk suggesting 50. The market’s expecting about 100 basis points or more in cuts by the end of the year. I think that’s where they’re heading. As for the market, the first move is often the wrong move. So, if we rally today, I’d be more cautious tomorrow. If we sell off today, it might be a buying opportunity tomorrow. There’s a lot of negativity right now—everyone’s concerned about the worst two weeks of the year in September and election year jitters. Usually, we see weakness in October before the election, so the stage is set. People are already moving into defensive stocks like utilities. We might get surprised, and the market could go up in the coming weeks, which would shock a lot of participants.
NEIL CAVUTO: I don’t know the history, but I’d be curious, Scott—if it does turn out to be a half-point cut today, which seems unlikely, how do you think the market would react? Would it see it as panic on the part of the Fed? Or would it think the Fed is being overtly political, trying to help Kamala Harris? How might the market spin it?
SCOTT MARTIN: I think the market would see it as a victory because it would suggest that the market pushed the Fed into action. As Tom mentioned, based on data points like the unemployment rate, wage growth, and the stock market, the Fed doesn’t need to cut right now. So, if the Fed moves to a 50 basis point cut, the market would see it as a win. However, the market is savvy and will likely sell off both bonds and stocks afterward. The market will question the Fed, asking, “What are you going to do next?” That uncertainty could lead to a jittery mood heading into the next cut.
NEIL CAVUTO: Alright, gentlemen, don’t go anywhere. I want to pick your brilliant brains a little more during the broadcast.
