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McAlinden on Market News (Audio) · Bloomberg Intelligence

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  Speaker 1: This is Taking Stock with Kathleen Hayes and Prim Fox
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  Speaker 1: on Bloomberg Radio, a special live broadcast today on taking
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  Speaker 1: Stock at the fourth Annual Canadian Fixed Income Conference sponsored
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  Speaker 1: by National Bank of Canada Financial Markets here at Bloomberg
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  Speaker 1: World Headquarters. You've had a terrific day amidst several hundred
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  Speaker 1: institutional investors who have come here to get an in
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  Speaker 1: depth look at the market for Canadian bonds, and certainly
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  Speaker 1: markets around the world, whether it's bonds, stocks or commodities,
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  Speaker 1: have been royaled by uncertainty over central banks and where
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  Speaker 1: they are heading next. So we want to bring in
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  Speaker 1: someone who can help us sort all of this out.
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  Speaker 1: Joe McLendon, founder and Chairman mac Lindon Research Partners and
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  Speaker 1: its parent company, Katalpa Capital Advisers. Joe, welcome, Thank you.
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  Speaker 1: What a time we're having in the markets. I mean,
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  Speaker 1: I think at this point, I feel like I don't
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  Speaker 1: know if bonds are selling off, and we had another
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  Speaker 1: bad day today because what the VET isn't going to
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  Speaker 1: raise rates in September, because they're probably going to raise
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  Speaker 1: in December, and the same thing for stocks. How are
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  Speaker 1: you starting this out? I I think it's not um,
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  Speaker 1: whether they raise rates in September or not, because it's
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  Speaker 1: most likely that they won't given the presidential election, UM
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  Speaker 1: and the division that we apparently have on the on
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  Speaker 1: the f O m C. But rather, I think the
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  Speaker 1: certainty that may come out next week about the December
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  Speaker 1: rate hikes and three or four more rate hikes next year. Uh.
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  Speaker 1: That information is likely to come out with the f
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  Speaker 1: O m C meeting next week on Wednesday, and I
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  Speaker 1: think that's what's got the market in a tizzy. Joe
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  Speaker 1: Mcalindon have taken a look at the performance of the
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  Speaker 1: SMP five hundred so far this year. It's up a
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  Speaker 1: little bit more than four out Jones industrial average, a
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  Speaker 1: little bit more than three and a half percent. If
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  Speaker 1: you've made some money in the market, what should you do?
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  Speaker 1: Should you just cash out for a little bit, pay
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  Speaker 1: your taxes and wait for things to settle, or do
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  Speaker 1: you remain fully invested? UM? Well, I wish you didn't
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  Speaker 1: have to pay those taxes, but I would. I would
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  Speaker 1: be raising cash here. Cash is my favorite asset class.
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  Speaker 1: I think that both bonds and stocks are gonna be
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  Speaker 1: UH in for a tougher time over the next three
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  Speaker 1: to six months. Because of what's going on with monetary policy.
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  Speaker 1: Um number one, Number two, the uncertainty of the election outlook,
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  Speaker 1: and number three, Um, you're going I believe, Pam, you're
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  Speaker 1: gonna be getting uh some very nasty inflation numbers uh
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  Speaker 1: over the next six months as the year on year
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  Speaker 1: energy prices begin to push the CPI up towards a
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  Speaker 1: three handle and and maybe higher. Okay, So and it's
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  Speaker 1: it's inflation is going to move up, and you think
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  Speaker 1: that is what's going to force the fits hand to
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  Speaker 1: uh move on because the headline cp I guess to three,
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  Speaker 1: So good for stocks or bad for stocks? If inflation
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  Speaker 1: is rising, companies have more pricing power. Companies have more
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  Speaker 1: pricing power, and and beyond the uncertainty of the next
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  Speaker 1: three to six months, I would say that that that
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  Speaker 1: pricing power is going to be a very big positive.
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  Speaker 1: And the fact that historically stocks are a good inflation hedge,
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  Speaker 1: that that kind of thinking will kick in. But in
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  Speaker 1: the short run, you're gonna go front. You have to
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  Speaker 1: go from a hey, there's no inflation and the fit's
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  Speaker 1: never going to raise interest rates into a new mindset,
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  Speaker 1: and that that transition, along with the uncertainty over the election,
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  Speaker 1: and who knows where that's going at this point. Um,
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  Speaker 1: I think it's going to be a difficult period. And
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  Speaker 1: you've had a you've had a gradual topping out of
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  Speaker 1: stock prices in the US through August and now we're
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  Speaker 1: rolling over. It's been an insignificant, really correction so far,
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  Speaker 1: but I think it's gonna get worse in October. Joe McLendon,
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  Speaker 1: I don't hear you talking about gold or any precious
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  Speaker 1: metal or any traditional safe haven other than cash. Why
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  Speaker 1: is that? Well, I didn't get to that yet, Tam.
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  Speaker 1: I would say, there's always uh places to make money
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  Speaker 1: on alongside and my two favorites, believe it or not,
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  Speaker 1: there are two things that got hammered today. Um, but
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  Speaker 1: that's happened many times before, and then they turn around
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  Speaker 1: and start calling back up again, and that is gold
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  Speaker 1: and gold stocks and oil and oil stocks. And I
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  Speaker 1: think that's where you want to be. And this kind
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  Speaker 1: of changing environment, I think the growth side of the
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  Speaker 1: market is very vulnerable. Bonds are very vulnerable, and uh,
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  Speaker 1: you know my I personally, UM would like to uh. Well,
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  Speaker 1: if I personally am focused in my own investing on
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  Speaker 1: cash and energy and gold well, and as a matter
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  Speaker 1: of fact, one of our big stories on the Bloomberg
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  Speaker 1: today the bond market sell off, deepening as money managers
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  Speaker 1: pile into cash, and Bank of America their latest surveys
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  Speaker 1: showing investors ramping up cash holdings to near the highest
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  Speaker 1: and fifteen years. Well, I think it's going to go
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  Speaker 1: higher because I mean, look, the market is just what
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  Speaker 1: is it all three percent from the August high? Uh
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  Speaker 1: and and uh. I think there's a lot of additional vulnerability.
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  Speaker 1: I mean, these corrections that we've had over the last six, seven,
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  Speaker 1: eight years UM have typically been single digit, but every
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  Speaker 1: once in a while we've gotten double digit decline. And
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  Speaker 1: I think, uh, between now in the spring, that's that's
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  Speaker 1: what the exposure is. And I think the decline and
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  Speaker 1: bond prices could be just as bad um as what
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  Speaker 1: we likely to see in stocks as we moved towards
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  Speaker 1: a new reality that the set is indeed kind of
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  Speaker 1: tighten three or four times next year, inflation is parking
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  Speaker 1: up um and uh, and we have the uncertainty of
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  Speaker 1: a new administration. I think that's going to be true
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  Speaker 1: no matter which canadate wins. I want to thank you
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  Speaker 1: very much Joe maclendon is the founder and the chairman
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  Speaker 1: of Macaillndon Research Partners and its parent accompany, Kaupa Capital Advisors.
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  Speaker 1: We've been broadcasting live from Bloomberg World Headquarters, site of
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  Speaker 1: the fourth annual Canadian Fixed Income Conference, sponsored by a
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  Speaker 1: National Bank of Canada Financial Markets. We've learned a lot
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  Speaker 1: about Canada. We have and all the the government officials,
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  Speaker 1: industry leaders so much. We think national Big of Canada
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  Speaker 1: financial markets are being here. Indeed, you're listening to taking Stock.
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  Speaker 1: Thank you for listening. This is Bloomberg