So joining me now for more on today's market action
the best day that we've seen for stocks in several
years with the NASDAQ up 7.4% is chance for neuquen
chief investment officer at Oxbow advisors Chance. Thanks for
coming on the show. So pretty, pretty good
gains on the back of this inflation report. What's
your take? Hi Kristin. Yeah, it's a
nice relief rally for anybody who owns stocks out there
and even long term bonds with long term treasury yields
having come down quite a bit. But from our
view, despite this inflation number coming in lower than
expected, it doesn't really change our outlook. The
Fed still hiking rates, They're still tightening policy,
which is gonna make it tough for growth to really
accelerate here. And just to think back to previous
bear markets in the dot com bubble, that was
a three year long bear market. There were 10
separate days where the NASDAQ 100 went up by 7%
or more in a single day and it didn't stop
things from continuing to go down. And similarly in
March 2020 on March 13th, the NASDAQ was up
9% that day and yet rolled over and ended up
taking a bit longer before you made that final low
. So consider that we're still seeing the Fed raised
rates, There's no history of a bear market bottoming
while rates are still being increased. So it's a
nice relief, but we think it's still a tough
environment Now, that's interesting chance. So based on
that comment that you said there's no history of the
stock market bottoming while rates are rising, you think
that it will take until the Feds stops its higher
rate, policy stops raising rates for the market to
actually turn around. Usually it's not even the pause
, it's actually them starting to cut rates and several
times cutting rates before you typically see a bottom.
And I think this has just been such a unique
atmosphere because they've had to raise rates so far just
to try to catch up to where inflation is today
and they're still trying to get there. The core
PC inflation number is still at 5%. And Chairman
Powell has said that he'd like to see the Fed
funds rate get above that level. So he's probably
hoping that that PC number will start coming back down
to 4% or below. And then you can start
to see him pause. But from our perspective,
we just think this is gonna take longer to play
out and the first half of next year, it's
probably gonna be a difficult environment for. Okay,
so what should investors do chance? I mean,
we're already down what, like 30% on the NASDAQ
for the year despite a 7% pop today. Again
, the best that we've seen in years, should
investors stay the course if you think a new bottom
is on the way? I mean, do you
think investors should sell at these levels. We trimmed
a little bit of our stock portfolios today. Just
on some of our positions that we weren't feeling as
strongly has stronger conviction about uh just given that it's
not often you see a seven or 10% pop in
some of your shares. Uh I think if you're
a younger investor you continue to just dollar cost average
in the airport folios. If you're in your twenties
or thirties and just consider the long game that you're
not going to be needing those savings for decades.
But if you're a retiree we think it still pays
to be patient, keep some liquidity in your portfolios
and stay somewhat defensively positioned because we think this will
continue to be a choppy environment for a while longer
. Yeah I think choppy indeed. You know I
do want to ask you about the crypto market chance
. I'm not sure whether or not your company invest
in Cryptocurrency but I think the fears with the collapse
of F. T. X. And the other
crypto entities that we've seen over the past few years
is causing some concern about contagion and cryptocurrencies trading like
stocks right. They are obviously more risky than risk
assets like stocks. But is there any concern that
the contagion might move beyond F. T. X
. We don't own or recommend any cryptocurrencies for our
clients. But just broadly we can say that uh
what evidence has shown is that when you're in a
tightening monetary environment when central banks are raising rates and
especially when the U. S. Dollar is appreciating
in value relative to other currencies like it has been
throughout this year. That's a very difficult environment for
cryptocurrencies to do well and we think that environment is
going to continue for several more quarters at least.
So it wouldn't surprise us if that led to some
more weakness and difficulty in the crypto market beyond even
what we just saw happen at FT. X.
Yeah I know. I think that contagion fear is
real. Um look I want to ask you about
in addition to inflation earnings reports that we continue to
see come in growth still technically on pace, albeit
pretty meager growth for the third quarter. What kind
of status corporate America in and should Americans be concerned
about potentially being laid off in these next 6 to
12 months on the question of layoffs, it seems
like it's a it's a bit different to past recessionary
environments where you might see the unemployment rate going up
in the past, that might be more blue collar
type roles in manufacturing or transportation or in housing that
you might see that sort of an issue or in
construction. But right now it actually seems more like
service related jobs management positions, especially in tech.
Uh That's where you're seeing more of the layoffs where
there was just too much hiring that occurred during the
pandemic when certain industries thought they were going to see
a boom in demand and now it's rolled over.
So we think that's made this environment a little bit
more difficult to forecast where the unemployment rate is headed
. So it kind of depends if you're seeing or
you're working in industry where you're seeing a lot of
signs up looking for new hires, you're probably okay
for a while. But obviously we're seeing more and
more announcements from tech businesses that are cutting on average
, you're seeing 10 to 15% of their employee base
. Yeah. And I just want to note here
, chance to similar to what you've expressed here during
our interview, I know Carl Icahn, obviously well
known billionaire and investor saying he does still think we're
in a bear market despite today's relief rally as well
, call it. Right. So concerns that there
could be more selling ahead. Is there any real
indication that inflation can continue to come down? How
confident are you that higher prices can cool in the
future? We think that inflation can come down and
will come down in the quarters to come? The
question is is that coming because of what the Fed
and other central banks have done to in essence create
a recession that we expect to take hold next year
. And that can naturally bring down inflation, but
it creates different problems because growth will have turned negative
on a real basis. Uh And then the other
question is, where does inflation start to settle out
. Uh we noticed today that the sticky components of
the inflation metric. So the indicators that don't change
that much from month to month still increased at an
annualized rate of five and a half% 3%. So you
need to see some of those metrics start to come
back down before you start to think that we're back
in that range that we were in throughout the 2010s
. Alright, chance, we're gonna leave it there
. Thank you so much for coming on the show
again. A very strong day for stocks relief down
here on Wall Street with the NASDAQ up 7.4%.
That is chance, Mannequin Chief Investment Officer, Oxbow 00:07:27.920 --> advisors.