for more inside an early morning trading, let's bring in Bill Stone,
chief investment officer at the Glenview Trust company?
Uh, I want to get your thoughts on the major indexes, you know,
spiking monday and then clearly the market couldn't
build on that momentum more success into Tuesday.
And even today we're seeing kind of this broader pull back,
why are we seeing these brief moments of positivity,
a seemingly moment of buy the dip, people thinking that we've hit the bottom,
but then we realized a more sustained and kind of consistent pull back.
Yeah. And I think it's as simple as saying we're in a bear market.
So, uh, you know, while we haven't officially hit 20% down, um,
I do think we eventually get there and that's not that I'm negative because
I think you have to look at it that in typical bear markets,
you see just vicious upside rallies and then they
typically don't follow through until eventually they do.
So when you actually look at history, once you're down 20%,
it is typically a very good time, which we're pretty close to it now.
Off the highs, it is a very good time historically to by now, maybe not right away.
Um, but it typically works out extremely well.
Obviously tech took the biggest hit yesterday.
Speaking of the biggest hit, snap, 40 something percent, 43%
end of the day, lower,
what do you make of of snap Ceo Evan Spiegel warning of this slowing growth, you know,
can we look at that more broadly because that's seemingly how the market took.
It really is fear that other names, like a google,
like a meta are going to have this sustained kind of pull back.
Is that overblown or truly the reality of the future for tech,
at least in the short term.
So, you know, one thing is so clearly,
um I'll just back it up and say advertising in general and obviously snap,
you're talking about the revenues coming from, you know, online advertising,
advertising in general is very connected to GDP growth economic growth.
Um, so we know that whether you're talking about online or not online advertising.
Um So I think that's why you saw it just ripped through the entire group now.
I'd argue it, I think it's overdone we own uh facebook or metal,
whichever you'd like to call it and really like it at these kind of levels.
I'd say the same thing about alphabet google.
Um even, you know, it showed up in the non, I'll say they have some online business,
but
but in terms of like an Omnicom that I think is interesting.
Uh Lamar that does all, you know, advertising signs,
which again nothing to do with online.
Um but I do think perhaps it's a bit overdone,
but I think it is telling you the market is clearly now, um,
pricing in quite a bit of risk of a recession here at some point,
I'm going to say in the next 12 months.
Yeah, I think you'd be right in line with the broader consensus in terms of, you know,
recession probability,
um what advice do you have for investors really trying to navigate
a market where you're seeing sharp gains and then even sharper losses,
especially when you look at tech and that being really the favor
of the last couple of years falling out of that grace.
Yeah. So I think two things.
So one is like I mentioned earlier, you know, I'd say, you know,
comfort yourself a little bit with history, that is typically a great time.
Even though your mind tells you to run away from this thing because you keep,
you know, getting bashed every time, you know, it goes up a bit,
then it it'll have a big pullback.
I think that's one is that it typically has always worked or not.
Typically it is always worked out eventually in terms of buying when it's lower.
I would say the second thing is focused on companies that
you really know can make it through even an economic downturn.
So, you know, I'd argue, uh you know, a Cisco in the technology space,
uh they got whacked the other day for, you know, about 20%.
You know, I think those are the kind of opportunities or uh you know, like I said,
we like meta, a facebook, again short term pain in that business,
but I think long term,
if you don't think more and more advertising is going online,
all those kind of things.
I think they have a tailwind over the long run.
So I focus try and focus yourself on the long term.
It's it's not easy of course when you're getting, you know,
bashed around in the short term.
Yeah,
it's great advice but to your point it's advice that it's really hard to follow,
especially when you're looking at the numbers
every single day or you're looking at your portfolio every single day.
Maybe the advice is not
to look at it every day. Um Let's talk about the Fed right?
Because that's also obviously a major factor in the market,
especially when we look at inflation and trying to get inflation under control.
We know the Fed obviously you're gonna release
a minute later once a day inflation being probably the biggest
topic on Wall Street and certainly will likely be the biggest topic
in those meetings are in in the meeting minutes. What are you expecting?
You're expecting more of the same.
The telegraphing that the Fed has done already kind of being
reiterated in the minutes Or do you believe at some point maybe this point
the Fed is a little more worried and they changed its strategy a bit.
Yeah, I don't think that worry is gonna show up.
I think you're right on in terms of they're just
going to stick with their script in these minutes.
Um Now we saw a little change yesterday in the sense of finally
I say finally with the new home sales kind of cracking
yesterday where you actually saw the market's pricing in roughly two less
Fed rate hikes over the next year and a half than we had before. So
prior to yesterday, we were at about 10,
10 25 basis point rate hikes over the next 18 months.
We're down to about eight now, which is again, a lot of hikes yet.
Um, but there is maybe some, you know,
the market's already maybe taking down some of the pressure.
I again, I don't think you're going to see that in the minutes
at two o'clock today, but you know,
the markets have already kind of moved ahead of that.
So we shall see
so fast forward to june when the Fed actually kind
of make some decision on its next policy action.
What do you think that the Fed actually needs
to do to avoid further panic from investors?
Do you think again, it's just staying in the course, you've telegraphed this,
stick to it or you know, get a little more aggressive if inflation is in fact
trickling higher, we have not hit the peak at least as far as the data shows.
Yeah.
So I think they're going to just stick with the script and and do 50 basis points.
I don't think they're going to press it, the 2 75 basis points.
Uh, it's already priced in to do 50.
Uh And I also would say, I don't think they care that much about the stock market yet.
Um It would have to, I think go down a lot more.
Uh And and also it would need to spill over much more viciously into the bond market.
You're not seeing credit spreads wide.
Not enough that the Fed is going to get worried about, you know,
the system breaking down.
So um I wouldn't look for the Fed to save us on the stock side again.
That doesn't mean I'm negative.
Uh You know, I think in the short run, like I said, if you probably have more pain,
but you ought to be looking for opportunities here because eventually
it will turn before the before the numbers get better,
the stocks will turn.
I mean in fairness though,
the Fed truly has seemed to operate really with the markets in mind even going to the
extent of telegraphing what it plans to do
in a way that historic that is historically unique
in an effort not to spook the markets. So what would change the Fed from
continuing to operate in that in that respect?
No, and I don't mean they won't telegraph it and because you're right,
I think they've been more uh you know, out front of that than than most times.
I can remember. But that being said. I think you mentioned it.
I mean you didn't say it this way, but I would argue there in the corner,
right when you have inflation up at 8%, there's nothing you can do.
Like they have to hike.
So it's not a matter of saying,
well we're not going to hike because if they don't
hike then they lose all credibility around inflation fighting.
And that's what I said,
You know back, well, it wasn't that long ago.
They could just back off and say, Okay,
we're not going to hike this time because you know, we,
we don't have really high inflation until we can, you know,
maybe save the market that way.
Um, I
don't think they have it. Yeah, yeah. They just don't have that option now.
No, I think it's 100% fair to say listen to that at this point is backed into a corner.
Even if it wanted
to worry about the markets, it doesn't have the room or space
that it may have had, you know, a year or so ago when it was calling inflation
transitory and then we all realized, you know,
transitory wasn't in fact transitory before I let
you go here kind of amid this downturn,
focusing back on the investor for a moment.
What are some of the safer places to invest your money right now?
Um, Yeah, I was laughing because it's, you know,
it's hard to find one and I would actually argue you should,
you should probably not focus on the safest places in the short run, right?
So I mean you could say okay utilities or you know,
some areas staples areas like that, but again, they haven't been hit as hard.
I
look through the wreckage, right? I mean, I think you,
you know, as much as it is painful in the technology space and, and all those, I, I,
I think that's where you look again, you've got to be able to stomach that.
I'm probably way too early or somewhat too early on this.
Um, but you try and get yourself in things that again,
are survivors and then actually Shriver's once the economy picks up again,
that's actually pretty fair advice.
I mean, the reality is we look at some of these typical safety paths,
those valuations have gone up pretty tremendously.
So
if you weren't on that initial flight to safety now,
you're probably over paying for some of those names
and then maybe looking through the wreckage is where you get your best value bill,
Really appreciate your time and your insight bill Stone,
chief investment officer at the Glenview Trust Company