WEBVTT

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turning back to the major averages joining us now is

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tim bagley era chief investment officer of cap wealth and

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tim, what is your reaction to how markets closed

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today? Well, I think it was good,

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It was a little bit of relief. You know

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, the markets have had to digest a lot of

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action from the Federal Reserve, um this quarter and

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it's affecting everything from mortgage rates to how they value

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stocks. So you've said that the ongoing conflict in

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Ukraine makes the U. S. Market a safer

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bet for investors than european market. Why is this

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? Well, we're the we're the stable source of

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everything in the world. We've got the best regulation

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, We've got the best national security. We are

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self sufficient in oil and gas and our supply chain

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issues are minimal compared to the rest of the world

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. So the U. S. Is going to

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continue to be the safe haven um place to invest

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and save going forward. Now, does that mean

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that you believe investors in european markets should sell or

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what are you advising? Well, they, when

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they allocate capital, they're already allocating to the United

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States. You know, there's a reason why there's

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no real estate development projects in the Ukraine. You

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know, they're here in the United States. There's

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money from south America from europe, From Asia,

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15% of all the commercial real estate last year was

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purchased by the Chinese. So that that is a

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trend that even started and was very strong before the

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Ukrainian crisis. Now, if you said you expect

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the Fed to continue with the planned policies? It

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has outlined, what impact do you think this will

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have on markets and what should investors know? Well

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, let's talk about the mortgage market and that,

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that gives you the best insight as to what is

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happening in 2020. The average mortgage was 2.75 at

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the end of 2021, It was 3.25%,, It

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just crossed over 4.7%. So the Federal Reserve was

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the largest purchaser of mortgages. So they slowed up

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purchases, they've stopped purchases and then this week they

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announced that they were going to start selling mortgages.

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So all of a sudden the largest customer is out

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of the market and they're raising rates at the same

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time. So you're going to see the mortgage market

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and the housing market slowed dramatically. That impact will

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ripple through the rest of the economy as well.

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And it will start to bring inflation down as supply

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chains open up And, and you know, they

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reverse, you know, it's the reverse of the

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pandemic. They're pulling back everything that they put into

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the economy, we have 40% more money Has been

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printed since February of 2020 that existed prior to that

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. Now, you've also said that investors with cash

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on the sidelines should consider investing in the market to

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guard against inflation. Can you tell me more about

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that? Absolutely, my good friend Ron Baron spoke

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this morning about this, You know, if you

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look at the last 50 years inflation has run about

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4% and historically the best way to protect yourself against

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inflation is well capitalized big companies that have products and

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services that americans need where they have pricing power and

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that pricing power allows them to continue to increase their

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earnings and profits. And that shows up in good

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long term results for investors. Now, what are

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your thoughts on what we might see when first quarter

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results start to come out in the next few weeks

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? I think that there's a lag. So I

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expect first quarter results to be to be good.

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There will be some inflation protection pressures that will have

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an impact on earnings because like you were talking about

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earlier the rent, the runway, they've got higher

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costs. They haven't been able to pass those along

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yet. That has an impact on earnings and profits

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. But by and large american companies are still very

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healthy. The economy is still super charged and I

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think we're going to go through the rest of this

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year in better shape than what people anticipate. Alright

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, my last question for you tim is what sectors

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are you keeping an eye on Housing is the main

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one. of the United States economy is housing.

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We have to keep that moving. The the House

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, the Senate and the House can do a lot

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by getting Fannie mae and Freddie Mac recapitalized and released

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from conservatorship so that they have the capital to make

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up the slack from the Federal Reserve, not buying

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and actually selling the mortgage backed bonds that they accumulated

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since february of 2000 and 20. So what do

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you think happens when the housing market reaches that point

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where mortgage rates are so high that buyers are scared

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off from buying and sellers are no longer getting people

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walking through their house? Well, housing prices will

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start to moderate, the supply will get better,

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and builders, let's face it, they've been getting

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fat in the last year, year and a half

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, while there has been more demand than there has

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been supply. So they may not have five people

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bidding on a house waiting for them. It may

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go down to one. And and so a lot

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of the speculation that's been in the market in the

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housing sector will start to subside as the supply comes

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up, and it will naturally go up because of

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the affordability problem with rates going up as much as

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they have as quickly as they have. All right

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, all right tim, Chief Investment Officer at Cap

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wealth tim. It's been a pleasure having you on

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, I appreciate your expertise and shared it with us