1 00:00:00,080 --> 00:00:02,600 Speaker 1: Let's get to our guest, Dan Genter, CEO and ce 2 00:00:02,640 --> 00:00:06,519 Speaker 1: IO at Genter Capital Management. Dan, So, the mood obviously 3 00:00:06,640 --> 00:00:09,240 Speaker 1: is quite bearish in the U S stock market, in 4 00:00:09,280 --> 00:00:12,760 Speaker 1: fact globally, but the U S economy is actually showing 5 00:00:12,880 --> 00:00:15,680 Speaker 1: a lot of resilience and we see that in the 6 00:00:15,720 --> 00:00:19,440 Speaker 1: services data in jobs is reflected in the Atlanta FEDS 7 00:00:19,480 --> 00:00:23,120 Speaker 1: GDP now numbers. The stock market seems to be more 8 00:00:23,160 --> 00:00:25,200 Speaker 1: worried about the future. And I know you've got some 9 00:00:25,239 --> 00:00:28,960 Speaker 1: strong views on this. Is it due to two fears 10 00:00:28,960 --> 00:00:33,159 Speaker 1: of earnings revisions, slower growth or a FED with the 11 00:00:33,159 --> 00:00:36,519 Speaker 1: wind in it sales? Well, Brian, I think you just 12 00:00:36,560 --> 00:00:40,000 Speaker 1: have a very very classic case of people trying to 13 00:00:40,040 --> 00:00:43,480 Speaker 1: fight the FED, and they're just failing at every turn, 14 00:00:44,240 --> 00:00:47,040 Speaker 1: and the every time we try to make, you know, 15 00:00:47,159 --> 00:00:49,720 Speaker 1: some type of an effort to really move forward looking 16 00:00:49,760 --> 00:00:53,840 Speaker 1: at what uh certainly professionals feel are very moderate and 17 00:00:54,240 --> 00:00:57,240 Speaker 1: even somewhat promising economic data. You know, the FED is 18 00:00:57,280 --> 00:00:59,840 Speaker 1: in a situation to where it continues to be some 19 00:01:00,000 --> 00:01:03,880 Speaker 1: what obsessed, if you will, with regards to inflationary data. 20 00:01:04,480 --> 00:01:08,280 Speaker 1: And with Paul doubling down last week, I think he's 21 00:01:08,360 --> 00:01:11,440 Speaker 1: finally convincing people that they're not just trying to to 22 00:01:11,640 --> 00:01:15,880 Speaker 1: talk this back that he until he gets some quantitative 23 00:01:16,000 --> 00:01:21,000 Speaker 1: numbers that shows significant easing in the inflationary numbers, he's 24 00:01:21,040 --> 00:01:23,240 Speaker 1: going to continue to hit on the brake. And so 25 00:01:23,880 --> 00:01:27,559 Speaker 1: people are coming to that conclusion that the multiple contraction 26 00:01:27,760 --> 00:01:31,040 Speaker 1: versus earnings revision at this point is going to continue 27 00:01:31,040 --> 00:01:33,520 Speaker 1: to be where the fight is. And down on top 28 00:01:33,520 --> 00:01:35,039 Speaker 1: of that, of course, there is a concern of having 29 00:01:35,319 --> 00:01:38,600 Speaker 1: a recession or even a hard landing, and people looking 30 00:01:38,640 --> 00:01:42,360 Speaker 1: at the difficulty, if not the impossibility of having a 31 00:01:42,360 --> 00:01:46,360 Speaker 1: soft one. Well, I think that you're correct, and that's 32 00:01:46,400 --> 00:01:49,040 Speaker 1: the proper assessment, and I think that's the that's the 33 00:01:49,120 --> 00:01:52,000 Speaker 1: transition in thinking that people are seeing. They felt that 34 00:01:52,000 --> 00:01:55,120 Speaker 1: that a soft landing was certainly something that was able 35 00:01:55,160 --> 00:01:58,320 Speaker 1: to be. Uh, you know, you could architect in and 36 00:01:58,400 --> 00:02:02,440 Speaker 1: have that happen with the data that was improving, that 37 00:02:02,480 --> 00:02:05,000 Speaker 1: you were seeing cracks in what we were seeing in 38 00:02:05,040 --> 00:02:08,960 Speaker 1: some of the inflationary numbers, supply train was increasing, uh, 39 00:02:09,000 --> 00:02:11,640 Speaker 1: and so those problems were really being solved. And now 40 00:02:11,720 --> 00:02:15,040 Speaker 1: in the situation to where they're clearly going to slow 41 00:02:15,080 --> 00:02:17,560 Speaker 1: this economy, now people are looking at the fact that 42 00:02:17,919 --> 00:02:20,840 Speaker 1: we really have to look very hard at earning the revisions, 43 00:02:20,880 --> 00:02:23,320 Speaker 1: and what we all felt that was probably a two 44 00:02:23,360 --> 00:02:26,280 Speaker 1: forty three number for next year coming off of a 45 00:02:26,280 --> 00:02:29,600 Speaker 1: two thirty number for this year, is now severely in question, 46 00:02:30,120 --> 00:02:33,359 Speaker 1: as you can see the softening on the consumer discretionary side, 47 00:02:33,400 --> 00:02:35,959 Speaker 1: on the non durable side, and we're not even in 48 00:02:35,960 --> 00:02:38,919 Speaker 1: a situation yet where the higher interest rates have really 49 00:02:38,960 --> 00:02:43,520 Speaker 1: impacted significantly impacted real estate or disposable income because of 50 00:02:43,600 --> 00:02:46,720 Speaker 1: increasing adjustable rate mortgage rates. And so that's all in 51 00:02:46,760 --> 00:02:48,880 Speaker 1: front of us, and I think it's not being fully discounted. 52 00:02:49,240 --> 00:02:52,480 Speaker 1: Should the base case then be recession? And if so, 53 00:02:52,960 --> 00:02:55,359 Speaker 1: I suppose. The question then is do we take out 54 00:02:55,400 --> 00:02:57,920 Speaker 1: the June lows in the stock market rather than just 55 00:02:58,080 --> 00:03:02,040 Speaker 1: we test well, I think that we can hold those loads, 56 00:03:02,120 --> 00:03:03,640 Speaker 1: or let me put it this way, we should be 57 00:03:03,680 --> 00:03:05,680 Speaker 1: able to hold them, which is going to put you 58 00:03:05,720 --> 00:03:09,160 Speaker 1: back at about a fifteen five based upon this year 59 00:03:09,200 --> 00:03:12,280 Speaker 1: and a little more reasonable based upon next year. There's 60 00:03:12,280 --> 00:03:16,239 Speaker 1: no reason quantitatively, Brian to go through that. But right now, 61 00:03:16,280 --> 00:03:18,680 Speaker 1: with the with the market you know in the dulg 62 00:03:18,760 --> 00:03:20,600 Speaker 1: rooms that it's in right now, it's going to be 63 00:03:20,680 --> 00:03:23,440 Speaker 1: very hard to muster a lot of buying power that 64 00:03:23,520 --> 00:03:25,880 Speaker 1: it's going to give it buoyancy as long as you're 65 00:03:25,919 --> 00:03:30,880 Speaker 1: in this situation of significant unknown territory. That's being as aggressive. 66 00:03:31,840 --> 00:03:34,000 Speaker 1: You know, we've been talking about all the reasons why 67 00:03:34,080 --> 00:03:37,280 Speaker 1: markets have been royal looking chiefly at but the federal 68 00:03:37,320 --> 00:03:40,120 Speaker 1: reserve is the rest of the economy, and you have 69 00:03:40,240 --> 00:03:42,200 Speaker 1: you holding up and you know it does the day 70 00:03:42,240 --> 00:03:45,440 Speaker 1: to tell the true story gen earlier, the rest of 71 00:03:45,440 --> 00:03:47,839 Speaker 1: the economy is actually holding up well, and I think 72 00:03:47,840 --> 00:03:50,920 Speaker 1: it will continue just depending upon fat activity. You know, 73 00:03:50,920 --> 00:03:53,920 Speaker 1: when you when you look at what's generally happening in 74 00:03:54,160 --> 00:03:57,880 Speaker 1: the consumer area. If we look at what's happening in wages, 75 00:03:58,040 --> 00:04:01,080 Speaker 1: obviously there's a small tick up today in unemployment that 76 00:04:01,160 --> 00:04:04,800 Speaker 1: that's largely people rejoining the workforce. So people people have 77 00:04:04,920 --> 00:04:07,440 Speaker 1: money to spend, and they're generally spending it. I think 78 00:04:07,480 --> 00:04:09,640 Speaker 1: that the issues we talked about earlier is that if 79 00:04:09,680 --> 00:04:13,600 Speaker 1: you're increasing the cost of capital to both businesses and 80 00:04:13,680 --> 00:04:18,720 Speaker 1: to large capital goods purchasers, auto purchasers, home purchasers, you're 81 00:04:18,720 --> 00:04:20,960 Speaker 1: going to struggle with that. As long as we can 82 00:04:21,040 --> 00:04:24,159 Speaker 1: keep that in a somewhat sanguine environment, I think that 83 00:04:24,240 --> 00:04:27,080 Speaker 1: we will get through this without having a deep recession. 84 00:04:28,200 --> 00:04:30,160 Speaker 1: And so what investors are we trying to do at 85 00:04:30,200 --> 00:04:32,960 Speaker 1: some point is get out in front. Nobody's going to 86 00:04:32,960 --> 00:04:35,280 Speaker 1: wait until you know, the FED holds up a sign 87 00:04:35,279 --> 00:04:38,600 Speaker 1: and says all clear. Uh, you know, where does that 88 00:04:38,680 --> 00:04:42,400 Speaker 1: point come? Is it after two or three CPI prints 89 00:04:42,440 --> 00:04:45,239 Speaker 1: that are lower? Does it have to drop a lot? 90 00:04:45,320 --> 00:04:48,520 Speaker 1: And then if the Fed does start to ease off 91 00:04:48,560 --> 00:04:52,000 Speaker 1: a little bit, uh, does does it actually just stay 92 00:04:52,000 --> 00:04:55,240 Speaker 1: steady for a long period of time? Well, I think 93 00:04:55,240 --> 00:04:58,280 Speaker 1: as we started to allude to earlier, is that you know, 94 00:04:58,320 --> 00:05:01,400 Speaker 1: that is very difficult right now now to predict what 95 00:05:01,520 --> 00:05:03,400 Speaker 1: exactly the FETE is going to do. But I think 96 00:05:03,400 --> 00:05:05,640 Speaker 1: the market is trying to get ahead of it, and 97 00:05:05,760 --> 00:05:08,600 Speaker 1: we're trading at a reasonable multiple where we are now. 98 00:05:09,000 --> 00:05:12,240 Speaker 1: I think for investors that have some liquidity, they're never 99 00:05:12,240 --> 00:05:15,600 Speaker 1: gonna time this perfectly, and for them to begin averaging 100 00:05:15,640 --> 00:05:18,320 Speaker 1: into the market at these levels, which is now approaching 101 00:05:18,520 --> 00:05:22,640 Speaker 1: the June prior June lows is makes sense. And especially 102 00:05:22,680 --> 00:05:26,520 Speaker 1: if you're going into areas where capital appreciation is less 103 00:05:26,520 --> 00:05:29,280 Speaker 1: certain than cash becomes king and there's a lot of 104 00:05:29,360 --> 00:05:32,360 Speaker 1: high dividend plays out there in some sectors that certainly 105 00:05:32,360 --> 00:05:35,920 Speaker 1: are going to have some solidity that investors can certainly 106 00:05:36,120 --> 00:05:38,159 Speaker 1: start to stick their toe in the water. And if 107 00:05:38,200 --> 00:05:40,400 Speaker 1: they don't want to jump in at first, yeah, you 108 00:05:40,440 --> 00:05:41,719 Speaker 1: look at what's to be going on. We've got to 109 00:05:41,839 --> 00:05:45,919 Speaker 1: this data out suggesting that recessionary fears have meant that 110 00:05:46,000 --> 00:05:48,560 Speaker 1: in the week up till the end of August, nine 111 00:05:48,600 --> 00:05:54,760 Speaker 1: point four billion dollars was actually uh removed out of 112 00:05:55,120 --> 00:05:58,599 Speaker 1: global equities. Now, that doesn't also sit very nicely with 113 00:05:58,760 --> 00:06:04,240 Speaker 1: that that CEO sudn't either, right, No, absolutely, And what 114 00:06:04,279 --> 00:06:07,520 Speaker 1: you're really seeing is that CEOs are Look, you're forced 115 00:06:07,560 --> 00:06:09,599 Speaker 1: when you're running a company to look at the cost 116 00:06:09,600 --> 00:06:12,520 Speaker 1: of capital and if you're expanding and the FETE is 117 00:06:12,560 --> 00:06:15,320 Speaker 1: increasing the cost of capital. And also bear in mind 118 00:06:15,360 --> 00:06:18,680 Speaker 1: and if if you're going from one percent or one 119 00:06:18,720 --> 00:06:22,000 Speaker 1: and a half percent levels to three and four their 120 00:06:22,040 --> 00:06:26,000 Speaker 1: actual cash outload for debt debt services in many cases doubling, 121 00:06:26,440 --> 00:06:29,240 Speaker 1: So that has a significant effect on budgets. So they 122 00:06:29,279 --> 00:06:31,720 Speaker 1: can't really help but be a little more pessimistic with 123 00:06:31,720 --> 00:06:33,839 Speaker 1: regards to their capital budgets and what they're going to 124 00:06:33,839 --> 00:06:36,720 Speaker 1: be able to deploy. And they know that that's going 125 00:06:36,760 --> 00:06:39,240 Speaker 1: to slow down and be at a lower level, you're 126 00:06:39,279 --> 00:06:43,080 Speaker 1: somewhat sanguine. I would say, given all that's happening, so 127 00:06:43,160 --> 00:06:46,120 Speaker 1: let's talk about where some of those investors might go. 128 00:06:46,680 --> 00:06:51,240 Speaker 1: I assume profitless profitless tech is probably not high on 129 00:06:51,279 --> 00:06:53,279 Speaker 1: the list. But would it, Would it be staples, would 130 00:06:53,279 --> 00:06:55,960 Speaker 1: it be reads, sort of be utilities? What are you 131 00:06:55,960 --> 00:06:58,440 Speaker 1: looking at? Look? I think you have to look at 132 00:06:58,440 --> 00:07:01,120 Speaker 1: the staple area. I mean, people are gonna get up 133 00:07:01,120 --> 00:07:03,360 Speaker 1: in the morning, They're gonna take a breath, they need 134 00:07:03,360 --> 00:07:05,679 Speaker 1: to eat, they need to drink. You're going to continue 135 00:07:05,680 --> 00:07:07,400 Speaker 1: to be in a situation where those are going to 136 00:07:07,480 --> 00:07:10,520 Speaker 1: be consumed. I also think that when you look at healthcare, 137 00:07:10,880 --> 00:07:13,200 Speaker 1: I mean you have some reasonable values that are there 138 00:07:13,240 --> 00:07:15,679 Speaker 1: that you can get in. That's a again just it's 139 00:07:15,720 --> 00:07:18,520 Speaker 1: its own staple item, if you will. I also think 140 00:07:18,560 --> 00:07:21,040 Speaker 1: at this level, because now it's drawn back a little bit, 141 00:07:21,120 --> 00:07:23,720 Speaker 1: is some of the energy stocks that are paying very 142 00:07:23,800 --> 00:07:26,080 Speaker 1: high dividends and in some cases five and a half 143 00:07:26,200 --> 00:07:29,760 Speaker 1: six percent dividends while you wait, especially the companies that 144 00:07:29,800 --> 00:07:33,360 Speaker 1: are more midstream, then that's a very good place that 145 00:07:33,480 --> 00:07:36,520 Speaker 1: you can ride this out, have a good strong cash flow, 146 00:07:36,920 --> 00:07:39,360 Speaker 1: and now at a better entry point, you know certainly 147 00:07:39,360 --> 00:07:43,280 Speaker 1: than where you were five days ago. So you're looking 148 00:07:43,320 --> 00:07:48,480 Speaker 1: at being very very quickly, deeply defensive in value very quickly. Yes, absolutely, 149 00:07:48,560 --> 00:07:50,200 Speaker 1: I mean that that's where you have to be. This 150 00:07:50,240 --> 00:07:52,760 Speaker 1: market is not going to push forward with higher p s. 151 00:07:53,080 --> 00:07:55,880 Speaker 1: So defensive stocks with high dividend, high cash flow I 152 00:07:55,880 --> 00:07:58,280 Speaker 1: think is a place to be. And thank you so 153 00:07:58,360 --> 00:08:01,080 Speaker 1: much joining into that c O and see I owe 154 00:08:01,120 --> 00:08:04,640 Speaker 1: a gender capital management just getting his take on the markets.