Dual Investment Strategy: Biotech Growth and Utility Stability – Ed Butowsky

Dual Investment Strategy: Biotech Growth and Utility Stability – Ed Butowsky

hey everyone I’m Jeremy saffron this is Kito news if you’re looking for the latest insights and analysis on the markets well you found it don’t forget to hit that subscribe button now today we’re seeing a mixed reaction in the markets following the release of the producer price index for April or the PPI which showed a notable increase of 5% exceeding expectations now this uptick suggests that while overall inflation pressures remain some underlying components are showing signs of cooling and meanwhile the S&P and broader markets are holding quite steady here so let’s discuss strategies for navigating the current markets especially considering recent shifts in sectors like utilities which have surprisingly outperformed now our next guest Ed Bowski of chapwood Investments is a seasoned wealth manager for high net worth individuals pro athletes and celebrities some you might even know previously nailed his call on utility stocks and he’s here to share his current outlook on the market Ed good to see you again great thanks for having me yeah I appreciate this uh let’s start with the economy uh we saw some latest numbers today’s PPI data came in a little higher than expected but given your knack for reading the market what’s your take on this were there any surprises what’s your thought on the economy’s health here well I’ll tell you the economy itself is doing very poorly the GDP number is you know was down and was much lower than what people expected so normally when when you have a GDP number that’s very low you would think that interest rates would be reduced to stimulate the economy but sadly you can’t do that because you have to get inflation pressures under control and in order to do that you have to raise interest rates to slow inflation down so you really have stagflation and which is the worst economic condition you could have at this point yeah you know in the FED talking a little bit today I know jome Powell was on a stage discussing that this might be longer a little bit higher for longer you know they’re waiting on these to come down so with the core components that influence the fed’s decision showing more restraint what’s your predictions here from the Central Bank what do you think this the fed’s going to do and more importantly uh how should investors prepare for it well investors should be prepared for higher interest rates you know remember that the feds the FED only controls the FED fund rate and the discount rate all the other rates trade based on supply and demand and I think the demand is going to be very limited uh in terms of interest rates going higher so I really believe that you’re going to see mortgage rates start to creep a little bit higher and interest rates on credit cards are going to go higher which is not going to be very good for the economy at all yeah well let’s uh let’s talk a little bit about your last visit I mean you pinpointed utility stocks as a sector to watch indeed they’ve outperformed uh it’s always nice having a guest come on and call it correctly Ed here’s what you said and if you look at the Magnificent 7 they’re all tremendously overpriced based on expected earnings right now uh so I’m avoiding the Magnificent 7 and I’m doing something something really boring I’m investing in utility stocks uh utilities have come under a lot of pressure last year as interest rates Rose and the idea is that interest rates are going to start to drop and you’re going to see natural gas prices have dropped as well and as a result of n gas pric is dropping you’re going to see a windfall profit coming into these utilities because they generate a lot of their energy from natural gas and coal so there’s going to be a profit you know unspoken or unknown profit to lot of these utility companies yeah and that uh that profit profit rather is is certainly you know telling we’ve seen quite a few of these utility stocks outperform any specifics here Ed that you can talk a little bit about these returns who outperformed for you were you surprised here well next era uh has outperformed tremendously that’s NE and Dominion resources has outperformed but if you look at the whole sector the whole sector looks really attractive even if interest rates creep a little higher you’re still going to see profits that you know come from natural gas prices being lower and coal being lower so there’s going to be that hidden profit uh in those and I think that’s a really wonderful place to be putting money even today you’re going to be looking at income of about three and a half four% and then the potential for growth so I’m looking for a total return on utilities as a general rule of about 12% for the next 12 months okay so you’re still long in utilities any advice for the audience on some specifics I mean you men mention NE Dominion any others that you’re looking at here that maybe in the out you know might outperform this 2024 this later in the year well I think NE is is the largest and the best one to be in it’s it’s involved with green energy as well and they’re they’re kind of the largest uh utility companies so if you look at any of the indexes NE represents about 17% of the index and that’s where I would be focused my attention Okay I mean given the unpredictability of energy price we’ve seen oil and gas prices you know with OPAC Supply demand issues kind of come off is there impacts on the utility stocks here how are you adjusting your strategies to hedge against any potential volatility well I’m I’m really not doing any hedging at all because okay I don’t believe interest rates are going to go that much higher if they do go high at all so I’m just kind of sitting there and just you know hoping that things go the right direction and they have been uh you know the hedging costs money and that takes money away from the profits that you’re going to make so I don’t do a lot of hedging um on utilities okay well let’s talk about the current market dynamics and where you’re seeing some similar untapped value now I mean you advise a lot of people uh you’re still long in utilities but where else you look at here Ed well I’ll tell you there’s a there’s a biotech uh ETF that I really like called labo lau and it is three times the profit on the biotech market and if interest rates drop biotechs are very heavy borrowers and if interest rates drop that will proportionately help biotech stocks quite a bit so I’m really banking on interest rates starting to come lower sometime in June July or even August and if so I think laboo is going to do very very well so I would be putting a little bit you know maybe 5% of your portfolio in a leveraged ETF called Lau um and that’s a riskier play that’s for your Tactical pal yeah allocation not your strategic allocation a tactical allocation is something that you do that is to accentuate the Strategic portfolio your strategic portfolio is your is your you know absolute allocation and tactical is something you lay on top of it to get better gains yeah I mean the last time we had you on I mean it was only February but it you were talking about the S&P kind of taking a little bit of a breath that magnificent 7 and it seems as though that’s continued to happen I mean AI is definitely playing into the tech stocks but is that kind of your assessment here are we still a little bit he heavy in the in the tech side on the S&P not only heavy in the tech side but heavy in Nvidia I mean Nvidia up and through April represented 37% of the gain of the S&P so the S&P was up 6% 37% of that was Nvidia and then the rest of it was uh meta so um now you did start to see Bristol Meyer come into uh the fold because of it’s uh weight loss drug so you’re starting to see a little bit more broadening out of the S&P 500 but the tech stocks are really the ones information technology stocks are the ones that are really leading the way okay I mean we’ve seen a lot of precious metal stocks really on the equity side it hasn’t caught up to the price of the metals but I’m curious is there any I mean you mentioned you’re not really hedging about anything but are you keeping your your an eye on gold prices and and different metal prices here in this market too yeah I am I I I hesitate to buy gold um I I it’s just a personal thing I just don’t like buying gold or silver yeah uh but there are a couple of uh stocks that that there’s a couple of ETFs one is called corn one is called soy and this is put out by Texton um and these invest directly into the Commodities and I do believe that commodity prices are going to start to rise uh pretty soon uh as we get further into the summer months yeah so those things that that that I like quite a bit but I really hesitate gold I I always have I’ve never been an investor in Gold I don’t think gold is a really good inflation hedge it has never proven to be everyone says it’s a great inflation hedge but it’s never been proven to be yeah even with those central banks out there just picking it up like this stuff’s you know hot yeah yeah no I um I’m just not a big uh go old bug okay well listen it’s an interesting time out there we’ve seen the markets this year so far uh obviously kind of go up a little bit they’ve come off slightly waiting for this inflationary pressure to kind of take a little bit of a hit but as we go into summer it feels like it’s not really a s and may go away type of market so as you talk to your clients uh what are the key strategies that you’re advising them to employ right now and for the rest of the year here Ed sure well we’re very much into ink plus growth so we’re invested in business development companies and Senior rate floating notes preferreds and we’re starting to pick away at the Reit Market um there there’s a number of REITs that we like the healthcare REITs and uh the digital uh REITs uh the digital uh what are they called the the banks that that uh where the servers are we’re starting to play a little bit into those and also the public storage rats uh the reta reats we’re staying away from but we also believe that the commercial real estate rats have gotten beat up so badly that they’re starting to look somewhat attractive right now but one that we really like is R which is a home residential Reit and that pays a nice dividend and it has a it has income plus growth but mainly it has growth and then income so we starting to look at as well it seems like there’s a lot of people that are playing on the Reed side but not touching the commercial real estate area still too much there still too much leverage too much debt to kind of get involved there yeah but the banks I think have it under control um I think that if you look at some of the sobering reports you you hear that about 25% of the Reit Market is going to have to or commercial real estate is going to have to refinance uh over the next year and um I they’re going to have to refinance at much higher rates but I think the banks are in a good position to do that refinancing and I think a lot of the commercial real estate is solid enough to withstand any of the negative implications yeah is there anything the concerns you add when it comes to US debt when you start looking at this debt when you start to kind of take an idea basically you start to look at how much they’re paying to just service the debt and does it make you worried about the future I mean what’s your outlook considering the mixed economic signals from you know job growth government hiring what’s your outlook for the US economy through to the end of this year yeah I I think the US economy is in really poor shape uh we you know you have a trillion dollars of interest payments now that go out from the government and that’s about 25% of what we bring in in tax revenue so 25% of our tax revenues going out in interest payment to pay for our public debt which is just not sustainable at all and the US economy needs a shot in the arm and and it it’s only going to get it if interest rates drop that’s the only way we’re going to get a stimulation in the US economy and as long as inflation is running High we’re not going to see that happen so I’m not really that strong on the US economy and I think the US dollar is going to get weaker which is by Design which will make our exports look more attractive uh because you want a weaker dollar to make our in our exports look more attractive but a weaker dollar is also not very good for the economy yeah quickly here are do you have any interest in looking at the broader markets globally some of the Emerging Markets I know I talked to some analysts and they they predict higher returns looking elsewhere than the us right now yeah I I I do I like Africa quite a bit um there’s a great fund called the Nile fund n uh which represents a lot of Africa and South America is a very very confusing place because there’s so many different Pockets there you have Argentina Peru Brazil uh Brazil you know should be you know this phenomenal growth story but its politics have really screwed things up now Argentina is you know getting itself out of its own way with the new uh Administration so I think Argentina is going to be a great grow story and then uh if you look over in South Korea you know that’s that’s really you know can go either way at this point uh because of what’s going on with China and Japan yeah and South Korea it’s interesting there to take note of their short Banning uh rule that takes place I’m looking at these meme stocks they’re making it come back here Ed obviously you’re not going to your clients and saying hey go and pick up a bunch of GameStop but it’s up $220 in the past five days pushing the Russell 2000 up um are you seeing some lift here is there any you know small caps that we should be looking at or is this just more smoke than fire and we’re going to watch this thing all come down I think it’s just more smoke than fire um I I see these headlines I get you know print outs that AMC and gamestock and even uh uh djt which is uh uh Donald J Trump’s uh company becoming a meme stock uh I I really you know as I advise clients I cannot advise a client to buy any of those and I kind of look at them and think H that’d be kind of fun to play uh but then it would take away all my time staring at that every day yeah yeah not really worth the return I guess for some it might okay well I’ll leave you with this cuz I know you got to go and we’re almost at a time but with all these factors in play if you could offer one over arcing piece of advice to our viewers looking to protect and to grow their investment in these times as we see this economic data come out what is it what would it be make sure you have income that is predictable off of your Investments you know you those stocks tend to go down less when there’s a big selloff because people want to continue to get the in in come off of them uh and it’s always nice to get income off of Investments and don’t shorten your time Horizon that’s the other thing that people are doing too much with being able to look at their phones 247 and value what their net worth is you know instantly don’t do that you know the best returns are the ones that when you don’t look at your phone and don’t look every single day at what your value of your account is so you know it’s time not timing in the market keep calm and carry on Ed Bowski joining us today from Texas hey thanks for this your insights are always invaluable and uh we’ll have you on in the future maybe we can go back and look at another one of these winds thank you thanks Ed appreciate it I’m Jeremy saff for all of us here at kco news thank you for watching we’ll have plenty of great content coming up so hit that like button and subscribe and we’ll see you soon [Music]

Jeremy Szafron, Anchor at Kitco News, interviews Ed Butowsky, Managing Partner at Chapwood Investments, who delves into the critical financial topics shaping 2024. We explore Ed’s insights on the recent Producer Price Index data, his strategic take on biotech stocks, and the allure of emerging markets for savvy investors. Butowsky reveals his top investment picks and strategies for navigating the complexities of today’s volatile economic landscape.

Follow Jeremy Szafron on X: @JeremySzafron (https://twitter.com/JeremySzafron)
Follow Kitco News on X: @KitcoNewsNOW (https://twitter.com/kitconewsnow)
Follow Ed Butowsky on X: @EdButowsky (https://twitter.com/EdButowsky)

0:00 – Intro
0:31 – Market Reaction Today
0:57 – Analyzing Economic Health
1:51 – Fed Strategies on Rates
3:33 – Utility Stocks Analysis
4:56 – Top Utility Performers
6:53 – Diversifying Investments
9:07 – Current Strategy Advice
11:17 – U.S. Economic Concerns
13:43 – Exploring Global Markets
15:40 – Key Takeaways & Close

#EdButowsky #investmentstrategies #BiotechInvestments #emergingmarkets #financialmarkets #KitcoNews #economicanalysis #markettrends #wealthmanagement #investingtips #stockmarket #stocks #sp500 #investmentstrategies #utilitystocks #biotechstocks
__________________________________________________________________
Kitco News is the gold standard in precious metals, commodities, cryptocurrencies, mining, and financial news.

SUBSCRIBE to our channel to stay up to date on the latest market and industry news.

For breaking news, views, charts, and data on precious metals, cryptocurrencies, and financial markets – visit us at https://www.kitco.com

To get market updates on the go, download the Kitco Gold Live! APP – https://applications.kitco.com

Stay connected:

Twitter – https://twitter.com/kitconewsnow
Instagram – https://www.instagram.com/kitconews
Facebook – https://www.facebook.com/KitcoNews
LinkedIn – https://www.linkedin.com/company/kitconews
StockTwits – https://stocktwits.com/kitconews

Live gold price and chart: https://www.kitco.com/gold-price-today-usa/
Live silver price and chart: https://www.kitco.com/Silver-price-today-USA/
Live crypto market data: https://www.kitco.com/price/crypto/

Learn more about Kitco News: https://www.kitco.com/news/about/

For more information on advertising, sponsorship and marketing promotions – please visit our online media kit at: www.kitco.com/advertising

Disclaimer: The videos are not intended to provide trading advice, and the views expressed do not necessarily reflect those of Kitco Metals Inc. Kitco News, its anchors, and reporters are not responsible in any way for the performance or actions of any sponsor, advertiser or affiliate of Kitco News.