Worried About Summer Gas Prices? Buy Energy Stocks

Worried About Summer Gas Prices? Buy Energy Stocks

all right well uh let’s talk a little bit more about this uh fed decision a lot to talk about on that front Eddie Gabor joins us now Eddie’s the co-founder and CEO of key advisors wealth management and Eddie let’s start with your takeaways from what we heard from the Fed chair yesterday I really think from a market perspective he gave the market everything they wanted in regards to tilting more doish uh the biggest concern was this inflation data that we’ve gotten over the last three months so some acceleration and the fear that he would uh say the word hike during his press conference and he was pretty clear uh what in the fact that there would probably be a cut before a hike now you know the bond market I don’t know if it really believes that at this point in time I think that’s why we’ve seen these gyration in the market and the uncertainty and yesterday certainly was uh one heck of a whipsaw from where we were at three to where we ended the day uh and I think it’s just a lot of uncertainty on that front but from uh Chairman’s p uh Viewpoint uh I took it as doish and bullish for Equity markets where this correction we’re going through right now more than likely is a bable dip for the month of May and should lead to us a pretty strong summer uh when we look at the fundamentals here in the near term uh what happens after that uh All Eyes has to be on inflation and the bond market those are the two most important things we’re watching good to see you Eddie so what do you think could lead to a rate increase and when do you see a potential cut so I think if they’re going to cut uh they’ll cut by September I do think that would more than likely be a policy mistake and the reason why is I think the markets are fine with status quo where we are here and I think that’s the right move because the biggest fear that the FED should have is them cutting and then causing inflation to re accelerate because when you cut rates that’s actually very stimulant to the economy and causes asset prices to go up uh so if we do have to have that rate cut and it does happen this summer I think we run the risk of the beginning of next year the FED having to aggressively hike because you know when you look at labor costs when you look at commodity prices uh they’re not coming down if anything they’re starting they’re accelerating and so by the time we get to the fourth quarter of this year and you look at the base effects and the year-over-year numbers on these assets uh you could see inflation and CPI headline number ticking up back towards that 4% number and no one wants to see that uh so it’s a real tricky spot here again I think it’s bullish tactically here for the next quarter uh but once we get to the fourth quarter of this year I think you’re going to see that inflation number become a real problem well a key point you brought up there we’re headed into the busy summer driving months what if we see $100 Barrel oil could pal be forced to hike rates absolutely uh I think that’s the obviously the biggest r risk cuz that certainly isn’t priced into anything and look let’s not obviously forget the unfortunate situation happening in the Middle East things have been calm the last two weeks over there but uh you know tensions are still high so you got the summer months to your point where demand is increasing uh you also have the global economy coming out of a recession you look at Europe you look at places like India and areas like China they’re starting their recovery process so that also adds pressure uh to oil prices uh and then if you have the war escalate $100 a barrel is not out of the question and if we do get to that then again I think you’re going to hear hike versus cuts and this is why energy is really one of the areas we’re most bullish on because I think that’s an area that can do well in either one of those scenarios of rate Cuts or leaving in the same or rate hikes yeah we’ve seen a lot of uh momentum certainly in the energy sector of late Eddie as investors look at their portfolios today they think about readjusting heading into the summer months based on what we heard from the Fed chair yesterday what are buyable dip options that you referenced earlier in the market so I think what you if you’re in the camp that inflation is going to stay sticky and maybe accelerate you want to own things that are going to do well in that environment and one of those is energy uh we actually bought the dip in energy yesterday it was down pretty good during that selloff yesterday so we added to our exposure there also some broad-based commodity exposures where you can get some gas you can get C copper silver uh gold these types of things that can do well in an inflationary environment uh is where you want to be uh we’re patient on technology right now technology has certainly uh broken down quite a bit from the highs that we saw a few weeks ago we will look to add to that but we want to get through earning season uh Apple tomorrow will be watching that guidance after the Bell that could cause some more pressure on energy in the semiconductor space uh so we will add to those and keep our core Holdings and large cap uh but owning Commodities and energy is certainly where we’re most bullish and I’ll add Emerging Markets to that we’re we’ve been bullish on India uh Emerging Markets is an area that can give you some exposure outside of the US that can do well in an environment and offer you a hedge when things are volatile here in the US so looking outside of the US I think is critical in this juncture as well too certainly all eyes on Apple earnings later today one thing Kristen’s been talking a lot about because she’s been hearing it here is the term Stag flation and pal addressed that yesterday probably his one personality moment uh during the press conference when he said he doesn’t see the Stag nor the flation which was a nice little uh little spice little personality for pal what do you make of that do you agree with his perception that he’s not seeing either side of it it was a great sound bite I hope it doesn’t come back uh to bite the FED but I think it’s too early to say stagflation you know we definitely you know when we look at the economic data we did have a deceleration of growth and in the last data point that we got and an acceleration of inflation and that would be deflationary uh but you can’t just take that one data point and say that that we’re heading to stagflation but look the trend if that continues then you’re going to hear that narrative go that way one thing I don’t think anyone can argue is inflation has accelerated and the one question mark is is where we’re going with growth and it’s too early to see a big deceleration and growth yet although we did see a data point so where the fed’s going to be in a really tough spot is if inflation continues to go up and then we see labor market break down and we start to see growth break down are they going to pick the economy or inflation uh and that’s going to be a real tough decision for them to make and that’s the one area that uh keeps us very concerned uh because there certainly is a scenario where you could see that happen um Eddie I want to get your take on what the Fed chair had to say about the first quarter data so up until yesterday we had always heard the FED say it was Data dependent and I I think that that still very much does hold but it was interesting to hear the Fed chair yesterday say that he wanted to see the entire first quarter of data that first quarter GD preprint uh that caused those potential stagflation concerns or at least some commentary down here as we’ve been discussing last week in order to make this decision from your perspective does it seem as if the FED might now be moving to a quarterly by quarterly consideration on what to do with rates you know it it certainly looks that way based on his comments uh and it’s interesting you know each meeting we kind of get something different in regards to how they want to look at things because at the end of the day the last thing they do want to do is have to raise rates uh everyone knows that if that happens that’s going to be problematic for the economy and for the market so they want to give it time and space to see really what happens with this data uh and see if we get any softness on the inflation front but I would argue that the bond market has already been doing the tightening for the fed and that’s the thing with these Capital markets is it doesn’t matter what the FED does or says if the bond market continues to go up that is tightening in itself so even though they haven’t raised rates and said they don’t plan to look at the move in the 10year treasury uh from the end of last year to where we are now that’s been a pretty incredible move so if the tenure starts to break through 4.75 and starts heading to 5% I would argue doesn’t matter what the FED says uh the bond market has kind of taken over here and this is why watching the rates and watching the dollar and how the capital markets react are going to be just as critical if not more critical than what the FED does and and that’s really bad news for home buyers and really the entire real estate sector as a whole as we see interest rates stay high if not uh keep going up above seven bottom line do you think at some point pow in the FED except a number that’s not 2% though they they won’t admit it now do they accept a different number closer to three I think they’re going to have to we’re look at the math and we just can’t figure out mathematically how it’s possible to get down to 2% without literally breaking the economy and you don’t want to break the economy uh but the way that you get inflation down to 2% which is a significant move from where we are now is to create a tremendous amount of demand destruction that causes prices to come down uh and again think at the end of the day they’re they’re going to have to settle for a number that’s higher uh because the result what they would have to do to get us to 2% is not a world that any of us want to live in uh Eddie other than uh perhaps buying some of the dip in energy right now any other portfolio adjustments that you’re recommending to your clients especially as it might come to cash uh bonds and even maybe CDs as well for some of your clients I think one of the nice things with this environment with rates getting higher is especially for those that are retired or close to retirement is for the first time in well over a decade you’re getting paid a uh interest rate that is acceptable and attractive to have some risk-free Assets in your portfolio looking at shorter term treasuries potentially getting you over 5% I mean we were at 0% not too long ago uh so we certainly have taken advantage uh of the short end of the curve getting those yields uh and again I think in the fixed income space if you go farther out on the risk Spectrum you can get yields 6 to 8% uh they’re not nearly as safe obviously as shorter term treasuries so I think now when you’re building portfolios income can be a true part of your strategy where you can get these 5 to 7% yields on top of to hedge with the other assets that have a higher volatility so if you have money right now this is actually a great time uh to have cash and cash like instruments because you’re getting paid a handsome yield all right Eddie Gabor co-founder and CEO of kid advisor wealth management joining us after that big fed decision H Eddie thank you

You could turn pain at the pump into a financial bump if you buy the dip on energy stocks, one analyst says.