WEBVTT - Robert Schein on the Markets (Radio)

0:00:00.120 --> 0:00:02.160
<v Speaker 1>Let's get to our guests. Robert Shin c i O

0:00:02.240 --> 0:00:06.480
<v Speaker 1>at Blankie Shine Wealth Management. Robert, So, a natural tail

0:00:06.519 --> 0:00:09.440
<v Speaker 1>wind is the seasonal time of year, it's usually good

0:00:09.480 --> 0:00:13.440
<v Speaker 1>for stocks. A natural headwind is the big and muscular

0:00:13.480 --> 0:00:16.680
<v Speaker 1>FED with its QT and with its higher interest rates.

0:00:17.120 --> 0:00:19.000
<v Speaker 1>Does one win in the short term and the other

0:00:19.040 --> 0:00:23.880
<v Speaker 1>win in the longer term. Yeah, we believe. So we're

0:00:23.960 --> 0:00:28.440
<v Speaker 1>seeing as we come to a close for a lot

0:00:28.440 --> 0:00:32.400
<v Speaker 1>of still uncertainty, a lot of um guessing as to

0:00:32.440 --> 0:00:34.720
<v Speaker 1>what the FED is going to do, and data dependent

0:00:34.800 --> 0:00:37.919
<v Speaker 1>as the Fed's going to be. But we're still we

0:00:38.000 --> 0:00:40.920
<v Speaker 1>still believe that the FED is going to continue. It's

0:00:41.159 --> 0:00:44.400
<v Speaker 1>has to win at all cost strategy meaning hawkish going

0:00:44.400 --> 0:00:50.280
<v Speaker 1>into well. San Francisco FED suggested that the jobless rate

0:00:50.560 --> 0:00:54.760
<v Speaker 1>doesn't necessarily signal an impending recession. Do you agree? And

0:00:55.000 --> 0:00:58.600
<v Speaker 1>canna resilient labor market and consumption support equities in the

0:00:58.640 --> 0:01:02.880
<v Speaker 1>coming up months. If we look at the invert of

0:01:02.920 --> 0:01:08.280
<v Speaker 1>yield curve, it's forecasting a recession. For the question is

0:01:08.280 --> 0:01:11.520
<v Speaker 1>how deep and the timing of which is is really

0:01:11.520 --> 0:01:13.640
<v Speaker 1>on the minds of everybody. But going back to the

0:01:13.680 --> 0:01:18.280
<v Speaker 1>strong labor market and the accelerating rate. Wage growth basically

0:01:18.360 --> 0:01:21.960
<v Speaker 1>poses the biggest threat for the FED, and ultimately they're

0:01:21.959 --> 0:01:24.160
<v Speaker 1>going to have to work on that. Next week we

0:01:24.240 --> 0:01:28.840
<v Speaker 1>have the wage inflation number, whether it's being uh, you know,

0:01:28.920 --> 0:01:31.440
<v Speaker 1>embedded entrenched in the economy, and that's what the FED

0:01:31.480 --> 0:01:33.759
<v Speaker 1>has really said. They're gonna they're gonna focus on that,

0:01:33.880 --> 0:01:37.760
<v Speaker 1>and they're going to push rates at all costs. But

0:01:37.840 --> 0:01:41.360
<v Speaker 1>the yield curve is telling us something completely different. That

0:01:41.440 --> 0:01:47.319
<v Speaker 1>fore we have to set up and be um cautiously optimistic. Essentially,

0:01:47.360 --> 0:01:50.400
<v Speaker 1>as we navigate through the new year. Let's say the

0:01:50.480 --> 0:01:53.040
<v Speaker 1>yield curve is wrong, and and the and the reason

0:01:53.120 --> 0:01:56.080
<v Speaker 1>I want to postulate that is that, um, the yield

0:01:56.080 --> 0:01:58.040
<v Speaker 1>curve probably didn't know that China was going to flip

0:01:58.080 --> 0:02:00.560
<v Speaker 1>on a dime and open up the economy like it did.

0:02:00.800 --> 0:02:03.240
<v Speaker 1>And we don't know exactly the trajectory of that. But

0:02:03.320 --> 0:02:06.280
<v Speaker 1>let's say that you know, they start cooking, um, consumers

0:02:06.280 --> 0:02:10.079
<v Speaker 1>start spending, they start traveling, and the economy grows. Doesn't

0:02:10.120 --> 0:02:12.280
<v Speaker 1>that bring the long end of the yield curve, the

0:02:12.320 --> 0:02:15.480
<v Speaker 1>tenures say, up around maybe four and a half percent,

0:02:15.520 --> 0:02:17.680
<v Speaker 1>And once it gets up near where the two year is,

0:02:18.000 --> 0:02:20.519
<v Speaker 1>then maybe people won't keep talking about the inversion of

0:02:20.560 --> 0:02:24.920
<v Speaker 1>the yield curve and recession. Yeah, you also have to

0:02:24.960 --> 0:02:28.119
<v Speaker 1>keep in mind that the globally, Europe's in recession right now,

0:02:28.280 --> 0:02:32.040
<v Speaker 1>and a lot of other outside the US we're seeing

0:02:32.080 --> 0:02:35.280
<v Speaker 1>signs of recession. And obviously the pivot in terms of

0:02:35.760 --> 0:02:38.600
<v Speaker 1>um sort of the support within China to support their

0:02:38.639 --> 0:02:43.520
<v Speaker 1>economy from real estate and so in other aspects um,

0:02:43.639 --> 0:02:47.200
<v Speaker 1>the global economy and the weight of global economy is

0:02:47.280 --> 0:02:51.800
<v Speaker 1>actually growth is coming down. And so that's a momentum

0:02:51.919 --> 0:02:55.800
<v Speaker 1>that really is unpredictable. So we have to be cautious

0:02:56.120 --> 0:02:58.959
<v Speaker 1>as we calculate that and as we navigate that, and

0:02:59.160 --> 0:03:01.160
<v Speaker 1>as much as central bank want to, you know, be

0:03:01.240 --> 0:03:04.959
<v Speaker 1>proactive and sort of have a soft landing. Um, we're seeing,

0:03:05.120 --> 0:03:08.119
<v Speaker 1>you know, the global markets tell us something different. How

0:03:08.160 --> 0:03:12.160
<v Speaker 1>about the dollar, the once mighty dollars now I guess,

0:03:12.160 --> 0:03:14.760
<v Speaker 1>for a lack of better word, languishing at a six

0:03:14.800 --> 0:03:17.600
<v Speaker 1>month low. Might the weak a dollar bit tailwin for

0:03:17.680 --> 0:03:21.720
<v Speaker 1>US earnings next year? The dollars a function right now

0:03:22.240 --> 0:03:26.919
<v Speaker 1>of predicting what would happen excuse me for the US

0:03:27.400 --> 0:03:31.560
<v Speaker 1>as are fed gets closer to maybe a not a

0:03:31.760 --> 0:03:34.480
<v Speaker 1>not a pivot but a pause in the US, which

0:03:34.520 --> 0:03:38.000
<v Speaker 1>is supporting the interest rates or the dollar if you will,

0:03:38.040 --> 0:03:41.640
<v Speaker 1>in the US. Uh, you're seeing the central banks around

0:03:41.640 --> 0:03:44.840
<v Speaker 1>the world stronger. So that's where you're seeing the dollar,

0:03:45.040 --> 0:03:47.800
<v Speaker 1>you know, below the twenty the two outer day moving average,

0:03:47.920 --> 0:03:50.120
<v Speaker 1>and even the fifty day moving average, which is a

0:03:50.200 --> 0:03:53.680
<v Speaker 1>technical basis. Yes, it's coming down, and it's actually a

0:03:53.680 --> 0:03:57.320
<v Speaker 1>welcome sign, uh for for for the globe. But at

0:03:57.360 --> 0:04:00.520
<v Speaker 1>the same time, we still think that the US is

0:04:00.520 --> 0:04:04.880
<v Speaker 1>going to continue on the interstrate policy that could strengthen

0:04:04.880 --> 0:04:08.280
<v Speaker 1>the dollar a little further from where it is. So

0:04:08.320 --> 0:04:11.040
<v Speaker 1>I'm interested in your strategy and how you play this. Uh,

0:04:11.120 --> 0:04:13.880
<v Speaker 1>you're sounding a little on the various side obviously going

0:04:13.920 --> 0:04:17.400
<v Speaker 1>into at least the first part of next year. UM,

0:04:17.440 --> 0:04:20.760
<v Speaker 1>what are some of your best ideas at the moment. Yeah,

0:04:20.800 --> 0:04:24.640
<v Speaker 1>we're we're definitely we've definitely been you know, risk management

0:04:24.920 --> 0:04:27.640
<v Speaker 1>philosophy for our clients for two and we're going to

0:04:27.680 --> 0:04:32.480
<v Speaker 1>continue the theme for and that's really the major theme essentially. Um.

0:04:32.839 --> 0:04:34.680
<v Speaker 1>You know, healthcare is going to be a good place

0:04:34.839 --> 0:04:38.279
<v Speaker 1>because the cash flow, the dividends, uh, consumer stables, especially

0:04:38.320 --> 0:04:41.480
<v Speaker 1>as you enter into a recession not only here but

0:04:41.560 --> 0:04:44.440
<v Speaker 1>around the world. Um, you know, those those household products

0:04:44.520 --> 0:04:47.520
<v Speaker 1>are are important. UM. We also believe that you know,

0:04:47.560 --> 0:04:51.600
<v Speaker 1>positive dividend growth, cash flow is king. And finally, it's

0:04:51.720 --> 0:04:54.520
<v Speaker 1>all about strategic rebalancing. What we did for our clients

0:04:54.520 --> 0:04:58.560
<v Speaker 1>and Blank Sealth Management back in March and April of

0:04:58.680 --> 0:05:04.040
<v Speaker 1>twenty twenty is when the equity markets provided a tremendous opportunity.

0:05:04.400 --> 0:05:07.480
<v Speaker 1>We rebalance client portfolios to take advantage that. We believe

0:05:07.560 --> 0:05:11.240
<v Speaker 1>that could happen again in going forward and we're positioned

0:05:11.240 --> 0:05:13.839
<v Speaker 1>for that. So in the short term, we're positioning treasuries

0:05:14.480 --> 0:05:16.839
<v Speaker 1>because treasury yield on the short term yield curve is

0:05:17.040 --> 0:05:19.760
<v Speaker 1>you know, well over four percent. Uh. And then the

0:05:19.839 --> 0:05:23.000
<v Speaker 1>large caps Robert, I want to I want to talk

0:05:23.000 --> 0:05:26.599
<v Speaker 1>about TAG. Tag having its worst year since two thousand eight,

0:05:27.120 --> 0:05:29.040
<v Speaker 1>is trying to claw back some of those games before

0:05:29.080 --> 0:05:34.520
<v Speaker 1>the year ends. Big winners today where too for Tag? Yeah,

0:05:34.520 --> 0:05:37.240
<v Speaker 1>we like large cap tech and that's the future if

0:05:37.279 --> 0:05:40.320
<v Speaker 1>you look at you know, three or five, ten years. UM. Yes,

0:05:40.440 --> 0:05:42.640
<v Speaker 1>this last year hasn't been the you know for large

0:05:42.640 --> 0:05:46.000
<v Speaker 1>cap tech. UH. What we own for our clients are

0:05:46.040 --> 0:05:49.640
<v Speaker 1>the large established companies you know, UM, have cash, strong

0:05:49.680 --> 0:05:52.839
<v Speaker 1>balance sheet and they can within a storm and out

0:05:52.960 --> 0:05:54.919
<v Speaker 1>on the other side of the recession they get stronger.

0:05:55.360 --> 0:05:57.880
<v Speaker 1>So we like that. Even though yes, year to date

0:05:57.920 --> 0:06:01.880
<v Speaker 1>they're down twenty respec actively, but they're the biggest, largest

0:06:01.880 --> 0:06:05.359
<v Speaker 1>companies and they will prevail long term. So we're strong

0:06:05.400 --> 0:06:08.839
<v Speaker 1>believers in large cap tech. The companies that don't have

0:06:09.000 --> 0:06:11.720
<v Speaker 1>strong balance sheets, don't have cash flow or sort of

0:06:11.720 --> 0:06:13.680
<v Speaker 1>the I p O of the spect world. For for

0:06:13.720 --> 0:06:17.279
<v Speaker 1>this year, we didn't invest in our clients for that UM,

0:06:17.320 --> 0:06:19.560
<v Speaker 1>and we don't believe in that. So yeah, there's two

0:06:19.600 --> 0:06:22.599
<v Speaker 1>different sort of markets in tech, but large cap tech

0:06:23.200 --> 0:06:26.479
<v Speaker 1>is an opportunity moving forward. Okay, in the large cap

0:06:26.520 --> 0:06:30.600
<v Speaker 1>tech space, UM, let's talk about some of the different industries.

0:06:30.600 --> 0:06:35.640
<v Speaker 1>So you've got semiconductors, you've got cloud, and you've got software. Uh,

0:06:35.680 --> 0:06:38.080
<v Speaker 1>and then you've got obviously the the sort of internet

0:06:38.080 --> 0:06:41.800
<v Speaker 1>companies and the e commerce companies. So which ones you

0:06:41.880 --> 0:06:48.000
<v Speaker 1>like the most? You like software, cloud will continue, UM.

0:06:48.040 --> 0:06:50.800
<v Speaker 1>And then again even the chips, even though we've seen

0:06:50.800 --> 0:06:53.560
<v Speaker 1>a chip glut, you have to look at these valuations

0:06:53.600 --> 0:06:58.000
<v Speaker 1>on these these companies because they'll work through the inventories. UM.

0:06:58.160 --> 0:07:01.400
<v Speaker 1>And you know, keep in mind the equity markets, price

0:07:01.680 --> 0:07:05.320
<v Speaker 1>in well before the recession. So you want to sort

0:07:05.320 --> 0:07:07.960
<v Speaker 1>of dollar cost average and take advantage of some of

0:07:07.960 --> 0:07:11.720
<v Speaker 1>these categories within technology because by the time you say

0:07:11.760 --> 0:07:15.320
<v Speaker 1>okay it's all clear to invest, that opportunity has passed.

0:07:15.320 --> 0:07:17.760
<v Speaker 1>So we're dollar costs averaging. We like the software is,

0:07:17.840 --> 0:07:20.000
<v Speaker 1>we like you know, some of the cloud computing, We

0:07:20.080 --> 0:07:21.920
<v Speaker 1>like some of the even the cyber securities which got

0:07:21.920 --> 0:07:24.560
<v Speaker 1>beat up this year. Um, but that's you know, there's

0:07:24.600 --> 0:07:27.880
<v Speaker 1>some good opportunities out there. So we're picking and choosing

0:07:27.880 --> 0:07:31.160
<v Speaker 1>our opportunities. But we have confidence long term on the

0:07:31.160 --> 0:07:35.320
<v Speaker 1>companies that we're picking up. Will you be picking and choosing?

0:07:35.480 --> 0:07:38.200
<v Speaker 1>Tesla has been caught up in a horrible route. Have

0:07:38.320 --> 0:07:43.520
<v Speaker 1>we seen bottom? You know, Tesla has been in a

0:07:44.240 --> 0:07:49.240
<v Speaker 1>you know, a tornado of headlines. Um. Long term evy

0:07:49.520 --> 0:07:52.400
<v Speaker 1>number one, they're going to continue. In fact, if you

0:07:52.440 --> 0:07:56.560
<v Speaker 1>look at the scalability, Uh, they're just hitting their numbers now.

0:07:56.600 --> 0:08:00.840
<v Speaker 1>Obviously China and in terms of COVID and potentially production

0:08:01.040 --> 0:08:03.960
<v Speaker 1>and ability to meet the production numbers is what we're

0:08:03.960 --> 0:08:07.280
<v Speaker 1>all waiting on. But yeah, we're taking advantage of Tesla,

0:08:07.880 --> 0:08:10.280
<v Speaker 1>you know, at these levels because we believe that even

0:08:10.400 --> 0:08:12.760
<v Speaker 1>a year to two years from now, even five years

0:08:12.760 --> 0:08:15.760
<v Speaker 1>from now, they're going to still maintain their leadership position.

0:08:16.360 --> 0:08:19.840
<v Speaker 1>And we believe that the growth is still there in

0:08:19.880 --> 0:08:21.600
<v Speaker 1>the e V space. And keep in mind that the

0:08:21.680 --> 0:08:23.840
<v Speaker 1>US has passed the bill that is going to even

0:08:23.880 --> 0:08:26.640
<v Speaker 1>add an incentive for all e VS for U S

0:08:26.680 --> 0:08:29.360
<v Speaker 1>consumers starting January one, so that's sort of a tail

0:08:29.400 --> 0:08:35.280
<v Speaker 1>win as well. We're seeing economic activity rebound in Chinese

0:08:35.280 --> 0:08:38.959
<v Speaker 1>cities where COVID infections have peaked, and so if you

0:08:39.000 --> 0:08:41.360
<v Speaker 1>look at the particularly in the north and the central

0:08:41.400 --> 0:08:44.960
<v Speaker 1>parts of the country, Beijing, chong Ching, chung Do, and

0:08:44.960 --> 0:08:50.480
<v Speaker 1>and Wuhan have seen their subways jump forty in the

0:08:50.480 --> 0:08:54.120
<v Speaker 1>week through Wednesday. So this is just the idea that

0:08:54.320 --> 0:08:56.679
<v Speaker 1>once you give freedom to Chinese people who have been

0:08:56.720 --> 0:08:58.880
<v Speaker 1>locked down for a couple of years, that they're going

0:08:58.880 --> 0:09:00.680
<v Speaker 1>to run. Can I get you excite died about China

0:09:00.720 --> 0:09:05.000
<v Speaker 1>at all? You can, um, But that's also going to

0:09:05.040 --> 0:09:07.800
<v Speaker 1>add to the inflation fears around the world right because

0:09:07.840 --> 0:09:09.960
<v Speaker 1>of the pent up demand. And so this is just

0:09:09.960 --> 0:09:12.959
<v Speaker 1>gonna be the knock on effect of economies around the

0:09:13.000 --> 0:09:15.880
<v Speaker 1>world going through COVID or COVID going around through the

0:09:15.920 --> 0:09:19.800
<v Speaker 1>world and adding into the demand. The goodness is the

0:09:19.840 --> 0:09:23.040
<v Speaker 1>supply chain around the world seems like it's it's opening up.

0:09:23.040 --> 0:09:25.679
<v Speaker 1>So that's going to help on the demand pressures to

0:09:25.840 --> 0:09:28.319
<v Speaker 1>ease some of the inflation and pressures. But I think

0:09:28.360 --> 0:09:33.160
<v Speaker 1>that's the number one key here is inflation around the world. Um.

0:09:33.320 --> 0:09:36.320
<v Speaker 1>For if we can get that under control and not

0:09:36.440 --> 0:09:40.040
<v Speaker 1>hit a global depression or a recession if you will. Um.

0:09:40.080 --> 0:09:42.840
<v Speaker 1>You know, China looks interesting, it really does. Um. So

0:09:42.880 --> 0:09:45.120
<v Speaker 1>it does a lot of opportunities. So we see the

0:09:45.200 --> 0:09:49.199
<v Speaker 1>first half around the globe, um, you know, be cautious,

0:09:49.840 --> 0:09:54.320
<v Speaker 1>be patient, and then start taking opportunities um as they come,

0:09:54.400 --> 0:09:57.160
<v Speaker 1>because I think we could see a turnaround, but we

0:09:57.200 --> 0:10:00.520
<v Speaker 1>could see some headline risks, some valuation, you know, concerns

0:10:00.520 --> 0:10:03.080
<v Speaker 1>in the market, bring the market down a little bit further.

0:10:03.440 --> 0:10:05.200
<v Speaker 1>But then it could be you know, sort of the

0:10:05.240 --> 0:10:07.880
<v Speaker 1>story of finally we have growth again and we have

0:10:08.360 --> 0:10:12.600
<v Speaker 1>you know, some opportunity in all right, Robert, thanks very

0:10:12.679 --> 0:10:14.880
<v Speaker 1>much for joining us. Really enjoyed it. Robert shin Ce

0:10:14.880 --> 0:10:17.319
<v Speaker 1>io it Blankie Shine Wealth Management