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Investor predicts Federal Reserve won't issue major policy shift - YouTube
Channel: Fox Business
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markets are trading higher this morning
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coming off the first down week in three
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weeks all three major market gauges
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finishing down during the week on
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concerns over the delta variant and the
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federal reserve's announcement that
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tapering could begin as early as this
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year
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i would also point out of course there's
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the debacle the biden-led debacle in
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afghanistan what does that mean for the
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safety of this country and our
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relationship with allies for years to
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come this we're waiting for the federal
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reserve's jackson hole meeting coming up
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later this week joining me now lane
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generational founder and managing
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partner former raymond james vice
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chairman fred lane also joining the
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conversation all morning long republican
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strategist lead partner at the madison
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firm jonathan madison and lafleur
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tangler investments chief investment
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officer nancy tangler good to see all of
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you this morning fred what do you expect
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from the jackson hole
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meeting
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later this week
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has the market already factored in the
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possibility of what the fed might do
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with the bond buying program as the year
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wears on
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i think i think that i think it's pretty
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well assumed that the fed will continue
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to make
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somewhat less dovish noises than they
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made but i don't see any major shift in
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policy coming um remember
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for if you will that jerome powell is up
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for reappointment in february so i'm a
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bit of a seneca and would say that he's
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likely to hue to the
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to the line of strong economic growth
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and let's let inflation run a little bit
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there's still an argument that inflation
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is transitory i don't believe it is
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but that's okay that's that
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people will have different points of
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view on that
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but i think
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if you look at what's going to come out
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of the summit i don't think it's going
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to be anything anything major uh let's
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remember too that
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you know we've seen an increase in
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interest rates in europe
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this morning
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but you know the the fact of the matter
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is they're a fraction of what they are
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in the united states and in germany
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they're still negative
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so uh you know we can't afford to go too
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far off the reservation in terms of
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interest rates
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uh because that will be disruptive to
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rest of world and i don't think we can
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ignore our that that impact and i think
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our
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our need to be in compliance with or
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cooperating with the rest of the world
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has increased in the last week let's
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face it you know as investors we always
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look at what are the risks out there and
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everybody talks about oh there's
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interest rate the fed and
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and this you know are we going to get
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fiscal stimulus or not are we going to
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get an infrastructure bill or not but we
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have introduced this over the last two
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weeks
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something we always talk about but we
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always talk about it kind of
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theoretically which is geopolitical
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risks and when you consider
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our standing in the world right now
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i think it's a major risk for the
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markets i think it's a major risk for
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the global economy
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um i think if you look at what's going
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on with china in the
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south china sea and taiwan you look at
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russia now more emboldened than ever um
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i i think we're not i think that's a
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political risk that if there was
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geopolitical tensions let me put it that
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way that could be the black swan event
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that we all kind of worry about you know
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we've had five years
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of no
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meaningful rollover in the stock market
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uh
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we haven't had a roll over five percent
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in five years
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okay eventually that's going to occur
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now long-term investors will take the
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view as we do
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that we can't we you know we can't time
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that we can't protect ourselves very
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well against it we're not going to worry
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about it we're not traders but
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nonetheless
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um long-term investment is made up of a
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lot of short-term decisions in
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short-term uh periods so you know we're
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mindful of fact that there's some risk
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in the stock market right now despite
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strong earnings despite strong economic
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growth
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uh you brought up the geopolitical risk
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i'll just add this
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that uh armen lechette the likely
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successor to chairman angela merkel the
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chancellor rather in germany said this
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is the biggest debacle that nato has
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seen since its foundation
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and we have clearly alienated our allies
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in britain
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in france and so again the calculation
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is now
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we have a a president here who looks
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increasingly incompetent certainly
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disengaged from his own advisors and
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where does that lead us
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uh in terms of national you know
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national security
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it's something we take for granted quite
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frankly i i want to get to this dallas
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federal reserve bank president robert
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kaplan joined maria last week to discuss
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his views on when the fed will taper in
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response to the delta variant listen to
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this
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but the thing that i'm going to be
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watching very carefully over the next
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month before the next meeting is is it
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is it having a more material impact on
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slowing demand and slowing gdp growth
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and so i'm going to keep an open mind on
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that and if it it is having a more
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negative effect that that might cause me
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to adjust my views somewhat uh from ones
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that i've stated
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nancy i wanted to bring you in here um
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your thoughts on that and also if you
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just want to weigh in on the
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conversation with fred
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yes good morning degan uh yeah well fred
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you said something super interesting in
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your notes and i'll get to in one second
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um but i am curious about your your view
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of tapering do you think it's a material
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event for the market and then
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secondarily
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many of the sectors you like i like as
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well
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but also they are subject to
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potential punishment if this
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human infrastructure bill goes through
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with taxes on the global taxes the
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guilty tax that will in inordinately
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affect technology
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and uh health care so i'm wondering what
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your thoughts are on that after you
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weigh in on the fed thank you
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well first
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let's let's recognize the fact that the
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fed has been the biggest buyer of uh of
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treasury bonds uh over the last year
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they've accounted for something like i
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don't know three quarters of the buying
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they're still buy over since 2020
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early march of 2020 they bought a
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trillion dollars in mortgage bonds that
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continues
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so i mean there's no question that the
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amount of buying in this market is
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controlling the rates there's no
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question about that and i think that
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will continue
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one way or the other they make they may
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lessen the rate of it but i think
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they're going to continue to control
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interest rates if if a 10 year at two
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percent wouldn't bother me at all i
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think it should trade higher than that
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quite honestly it wouldn't bother me at
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two and a half percent but i don't think
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the i don't think that's in the cards in
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the short term partly because of the
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what i'll call the global contagion of
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low rates and stimulus
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with respect to
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uh your other question about
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i think i know if you were talking about
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sectors specifically
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but
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um you know i think we continue to to
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hew to our line that we like secular
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growth companies this is a
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consumer-driven economy has been will be
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and i think some of the sectors actually
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going to are going to receive
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potentially
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some stimulus you know if you look at
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the semiconductor industry it is a of
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strategic importance to us we've learned
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that
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that pharmaceuticals and and biotechs
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are also of strategic importance to us
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pat gelsinger at intel is calling for
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federal stimulus uh we've learned that
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the sky works excuse me excuse me the
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global foundries and the taiwan semis
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you know are fairly important are
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critically important they're the
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founders that's who actually makes the
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semiconductors it's not nvidia it's not
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analog devices most of them are produced
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in these large foundries and those are
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strategic importance to us and those are
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not necessarily us-based taiwan
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semiconductor being the most important
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in taiwan building a plant
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in in texas currently right so i think i
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think i think our view is that you know
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st stick with stick with the the
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long-term growth aspect and i think
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you're right that in this short term
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there will be some punishment uh and
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industrials and commodities and and
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other
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materials will be will be favored fred
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thank you for being here this morning
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always fred lane
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