Speaker 1: Let's get to Michael Cogino, President and portfolio manager at
Speaker 1: Permanent Portfolio family of funds. So the FED chief Michael
Speaker 1: often sounds a little more devish in the in the
Speaker 1: news conferences than the statement. I think his comment to
Speaker 1: being sort of referring to being near neutral already really
Speaker 1: juiced up the bulls. But he also said that it
Speaker 1: doesn't matter if we get a negative GDP report, and
Speaker 1: that tells us that he's mainly watching the jobs market,
Speaker 1: and that has some implications. You can get some other
Speaker 1: bad data and maybe the FED doesn't take such notice.
Speaker 1: How are you playing this latest fit move? Well, the
Speaker 1: comment on GDP is self serving because I think we
Speaker 1: expect the number to not be that great tomorrow. And
Speaker 1: depending on your definition of recessions, um, you know, it
Speaker 1: either is or isn't. But it's really kind of a technicality. Uh.
Speaker 1: The economy is slowing, and I think the Fed's announcement
Speaker 1: today was indicative of the cross currents that are currently
Speaker 1: in the marketplace. I mean, on one hand, employment strong,
Speaker 1: on the other hand, we're near neutral, but on the
Speaker 1: other hand we might be raising more. They just might
Speaker 1: not be as big as chunks as we've seen in
Speaker 1: the last couple of months. So it all adds up
Speaker 1: a continuous or or it continues to add up as
Speaker 1: a lot of uncertainty and unanswered questions. So I think
Speaker 1: the way you play it is to be fairly diversified
Speaker 1: among a broad sector of assets. Sounds like a broken
Speaker 1: record for me, but but that's how you play this environment.
Speaker 1: You head your bets in a number of directions, and
Speaker 1: you have exposure in a number of spots, and that
Speaker 1: way you minimize downside risk um and you have multiple
Speaker 1: avenues to possibly make some money or stay close to
Speaker 1: zero in this environment. Michael Steve Angel here, of course,
Speaker 1: we just talked about how Powell doesn't think the U
Speaker 1: S is currently in a recession. How do you how
Speaker 1: deep do you feel the recession will will be? If
Speaker 1: there is one UH during this What you admitted to
Speaker 1: is a slowing US economy, Well, I I think you know,
Speaker 1: if you go by the technical definition, I think we're
Speaker 1: probably in one right now. I don't expect much in
Speaker 1: the second quarter, and even if it's positive, it's going
Speaker 1: to be marginally and probably negative year today. Um, the
Speaker 1: question as to how deep, how long, how extensive, we
Speaker 1: really don't know. I mean, there's arguments in a number
Speaker 1: of directions on whether this recession could be pretty brief
Speaker 1: and shallow given the employment picture, um or it could
Speaker 1: be deep in something we're mired in a while, if
Speaker 1: inflation is stubborn and we have a hard time reducing
Speaker 1: that number. And again I go back to the the
Speaker 1: point that we just do not have answers. It's a
Speaker 1: very unique cycle, given what we've done the last couple
Speaker 1: of years in terms of creating money, in terms of COVID,
Speaker 1: in terms of coming out of COVID, the voluntary shutting
Speaker 1: down of the economy, the unattended consequences of trying to
Speaker 1: get back online, not only here but globally. Um it
Speaker 1: just presents a lot of things we just don't know
Speaker 1: the answer to. So I can't tell you today well
Speaker 1: how deep it's gonna be or whether we're even gonna
Speaker 1: be in one, but I suspect we are and the
Speaker 1: jury's out as to how deep and long it'll be.
Speaker 1: So of course we talked to not the FED, but
Speaker 1: we also need to talk about the big tech rally.
Speaker 1: Tech investors overnight kind of latching onto perhaps what they
Speaker 1: wanted to hear from the fed, But Michael, does it
Speaker 1: reflect the fundamentals in tech right now? Meta disappointed after
Speaker 1: the bell Calalcolm gave a lackluster forecast, but again Microsoft
Speaker 1: yesterday had the disappointing results, but then gave a bullets Outlook.
Speaker 1: What's your take. It's always hard to predict stock directions
Speaker 1: on quarterly earnings. We're long on term investors, so it
Speaker 1: really whether I don't place much emphasis on immediate stock reaction.
Speaker 1: I think you know, tech generally has gone up the
Speaker 1: last month or so, um from an oversold condition. And
Speaker 1: if if the market is right, or people in the
Speaker 1: market or right and thinking that we're near the end
Speaker 1: of rate increases and might even be looking at rate
Speaker 1: cuts because of a recession down the road, then the
Speaker 1: migration towards growth stocks makes a lot of sense. Um. Well,
Speaker 1: I don't know if that's going to be the case
Speaker 1: or not, but but buying them now is a lot
Speaker 1: cheaper than several months ago. So um, you know you
Speaker 1: want to have it to versified portfolio, and generally speaking,
Speaker 1: that's where the growth is in the market. Um, But
Speaker 1: you have to look at those in conjunction with the
Speaker 1: macro economic environment, and just because they performed that way
Speaker 1: in the past, doesn't mean they will again. So all
Speaker 1: were sold a nice bounce that we need to learn
Speaker 1: more as to whether it's sustainable and moves further from here.
Speaker 1: So you're not a big believer in the fundamentals indicating
Speaker 1: that things will get better. And I think people generally
Speaker 1: in America probably share your thoughts. UM. I'm curious why
Speaker 1: if people have jobs they feel like they're either already
Speaker 1: in reflation or heading into it. Is it mainly inflation? Well,
Speaker 1: employment numbers are lagging indicator UM, and we're starting to
Speaker 1: hear announcements of companies restructuring laying people off. Jobless claims
Speaker 1: was a higher number UM than recent over the last
Speaker 1: week or so, So I mean, you know that that
Speaker 1: number could flip. But I think what you have, or
Speaker 1: what you've add in the last couple of years is UM.
Speaker 1: You had a lot of money put in people's pockets
Speaker 1: that went into savings accounts. It bought stocks and bonds
Speaker 1: in real estate. People were spending it. They felt good
Speaker 1: because they had that money, and those that could work
Speaker 1: or wanted to work, we're working in conjunction with that, UM.
Speaker 1: To the extent you're working, you still have that although
Speaker 1: prices are getting higher, So it's making you more nervous
Speaker 1: as to how you're going to spend. And for those
Speaker 1: that didn't work and they're spending their savings, at some
Speaker 1: point that's going to run out. The question is what
Speaker 1: if the job market turns and what if you deplete
Speaker 1: all those savings and assets, what are you going to spend?
Speaker 1: And that would be a tail win to a deeper
Speaker 1: recession if if that were to occur. So it does
Speaker 1: make sense to pay closer attention to jobs and job trends,
Speaker 1: um and underlying demand as to what would drive those
Speaker 1: jobs one way or the other. Hey, Michael, do you
Speaker 1: have a hot take on what's happening with the Chinese
Speaker 1: economy as it relates to its contribution to global growth
Speaker 1: or perhaps not global growth. Obviously we have Biden and
Speaker 1: see they're gonna be talking soon I think later today,
Speaker 1: But we're also getting you know, lots of words out
Speaker 1: of like the SEC sing U s and Chinese officials.
Speaker 1: They must reach an agreement very soon on access to
Speaker 1: audits to avoid any delisting of Chinese stocks. Do you
Speaker 1: see a decoupling as as kind of inevitable? Uh, that's
Speaker 1: a broad, broad question on a number of areas. I mean,
Speaker 1: you know, using accounting standards and and having common standards
Speaker 1: would make a lot of common sense for investors. We've
Speaker 1: we've allowed when you look at the overall terms of
Speaker 1: trade between the United States and China, UM, we've given
Speaker 1: up a lot more than we've received over the years,
Speaker 1: in my view, in terms of we let a lot
Speaker 1: of things slide. The markets are not even competitive, um,
Speaker 1: U S companies have a lot harder time getting traction
Speaker 1: over there than Chinese companies have here. It's also two
Speaker 1: are raising capital opportunities. The amount of privacy that we
Speaker 1: have to give up when we're over there versus what
Speaker 1: they're allowed to do here. That's that's above my pay grade.
Speaker 1: But the point is, UM, you know, you do need
Speaker 1: to have accounting standards to properly assess financial condition and
Speaker 1: financial statements that if you don't have it, that is
Speaker 1: a risk factor that I would say investor beware, UM
Speaker 1: And some investors are comfortable with that risk, others or not.
Speaker 1: We're a little less comfortable with that risk. Alright, Michael,
Speaker 1: thanks very much. Up against the clock. Michael Cogino, President
Speaker 1: and portfolio manager at permanent portfolio family of funds