Charles’ Take: Banking on Volatility

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He's earned decades of Wall Street success, a lifelong student of the market

who learned to navigate the world of finance with unshaking confidence,

an underdog who achieved the American dream.

Now the Fox Business Host is sharing all his investing wisdom with you

on Charles Payne's unstoppable prosperity podcast.

I don't have to tell you this, right? Lots of moving parts in this market.

I mean, everywhere, you know, and for many investors,

obviously it feels like a ball of confusion.

For many so-called experts, it does as well.

For my next guest, I'm going to say it's just another dandy office.

I'm going to bring in an eye-calf of those chief investment

practices and I only buy a second.

You know, there's a lot of concerns out there.

And we were just kind of talking in a break.

Let's just start with the, I guess, the overarching issue with this conflict.

Even before the conflict, there were signs of inflation coming on.

People were bracing for some of these economic data later in the week.

Inflation and geopolitics.

How, how, how does someone model that into what they're doing

into their, you know, a day-to-day investments?

We got a lot of very important inputs this week alone.

CPI and PCE, getting a sense of where inflation had been before the war broke out.

And that's important.

As you said, you saw manufacturing input prices started to rise.

Is inflation very sticky still notwithstanding the war?

Now, when you add the war on top of that,

that prolonged set of oil prices, right?

If you have a blip in the radar,

and we are able to achieve kind of a decline in oil prices from here,

that wouldn't really feed through in a meaningful way

and have a meaningful spillover effect.

But the kind of finger in the air kind of range,

I'm using $85 to $95 a barrel.

If we see that for a sustained period of time,

then do you start to think about four weeks, six weeks, a month?

Three months, three months, give or take.

You know, we don't love it anyways, right?

Because you feel the prices at the pump already, for example.

None of that is good for consumer sentiment,

but the consumer sector was not one we were recommending anyways.

We felt that there were some sensitivities there,

certainly in the K-shaped economy,

but you didn't really feel whether there was a trade-through effect,

trade-down effect when you saw the consumer sector writ large.

But there are other areas that are also affected by the consumers,

like financials, which have been drastically sold off.

Does that make sense to you when we still see growth

that is holding up a little impact?

It's certainly.

So the answer is no.

And if it doesn't make sense, should that be a red flag?

For what, for inflation?

For financials.

I mean, just for financials, you know,

the lagging sector in the S&P,

they were supposed to be the top sector this year,

one of the top sectors, led by banks

who were supposed to have an amazing year,

and they've been the exact opposite.

So does something like that concern you,

even if I, can you put a finger on why this is the case?

There's a lot of uncertainty out there.

Nobody likes uncertainty,

but let me tell you something remarkable.

You look at the VIX topping 30, just yesterday,

and you're watching Amazon today turn around

with $50 billion bond sale potentially.

You're seeing IPO filings come to the surface.

You're seeing M&A still happening.

So business is getting done regardless,

which means that even on top of the volatility,

the banks are going to be making money.

So when the next earnings season comes around,

that might create a little bit of comfort.

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What about interest rates and the Fedovers are,

you know, everyone's sort of saying,

okay, second half of the year rate cuts,

everyone's okay with that, you know, you have no choice.

But still a lot of question marks on

where rates will inflation and rates and worse.

There's a choice.

There's certainly a choice.

And I think you have to look at everything data point

by data point at this point because we're at a precipice,

both in terms of the labor market

and now also in terms of inflation.

If we see inflation tick higher,

then you would have that smaller chance

that we see that stagnationary scenario,

which is very bad for risk assets.

But on the side of the inflation story

in the labor market, you know,

the labor print we just saw last week,

disappointing.

You don't want to see another one of those.

Right.

And so if we see another one of those

and we've been warning about this all year,

you would see what we're calling bad cuts,

where the Fed has to cut to keep up with the labor market

rather than to get us back to neutral.

So what less than a minute to go

of all of these things spinning around,

what's the one that gives you the most hope?

I mean, you kind of alluded to it

that despite all of this stuff,

we're not far off the all-time high

and business is still getting done.

Listen, this is a chance to step back

let the sentiment flush out for a minute.

And eventually there will be an opportunity

to step back in both in public market

and in private markets.

But on this one, let the sentiment ride out for a minute.

There's too much we don't know

to make big bets for the future,

but create a shopping list.

Because eventually that time will come

once the dust settles a little bit more.

And hopefully the first thing that settles

is maybe the top of the grind.

Yeah, absolutely.

Good stuff, you know.

Appreciate it, thank you very much.

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