Rebecca Walser, founder and CEO of Walser Wealth Management, discusses how geopolitical conditions, the bifurcated economy, and other volatility could weigh on markets.
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00:00 Well joining me now to take a deeper look at what's impacting stocks is Rebecca Walzer founder and CEO of Walzer Wealth
00:07 Management. Rebecca great to have you on the show. Thanks for having me. Glad to be here. All right. So the final week of the
00:13 first quarter. What's your takeaway here for stocks. You know it's really mixed. We've definitely had a five month run. But that
00:21 also can be negative. Like and historically when you look at the S&P going up 25 percent in five months it's usually indicative of
00:29 either pre recession or some kind of asset bubble. Historically speaking. So a lot of people see a lot of runway still with the
00:36 six point one trillion in money market funds and excess liquidity and banks commercial banks that we've been comparatively speaking
00:42 to where it used to be before the corona virus. And so they still see a long runway. But there's still a lot of headwinds
00:49 Kristen. So I think this market is just really getting ahead of itself. When it was reassured on Thursday when the Fed came out
00:55 and said ensure the dot plot still showing three rate cuts for this year. You saw the market really like sort of take a
01:01 breather and be like OK we we are going to get some rate cuts. It just is going to be a little bit of you know slower coming
01:08 than we thought and starting a little bit later than we thought. Pushing it back to June at least. And so the market has
01:13 different things. The headwinds and tailwinds at the same time which makes this a very hard market to to actually call.
01:21 Interesting. So for any investors who might be on the sidelines. Rebecca do you think it is a good idea to dip their toes
01:28 back into stocks or would you kind of wait to see how the inflation data plays out. Yeah I think we'll get PC on Friday even
01:34 though you're like you're right. For a good Friday the market will be closed in observance of Easter. So I do think that it's
01:40 really hard for me. Kristen we're at the top top top. So it's really hard for me as a money manager to buy in at the top
01:47 because we want to look for opportunities especially when the market is performing and has run up so quickly in such a
01:54 short amount of time. So we would more look to buy opportunities and dips right now. And I think that we will have plenty of
02:00 those in April in earnest. Interesting. And what would you be buying in those cases. Well I do still think that
02:06 Nvidia has a long runway. I do think that I has a very long runway. It's in its infancy. If you look right now we are seeing
02:13 NASDAQ pull it back this morning because Intel and AMD are being impacted by potential China regulations that is going to
02:21 impact imports of semiconductors. So there is going to be headwinds. There's going to be other countries are trying to get in
02:27 on this AI craze that's really driving the U.S. market higher. So we're going to have to be very selective and look for
02:33 opportunities. But that is not to say that I is not going to give us a nice long runway of good returns. But it is going to
02:40 be a very difficult time because it's being inserted into such so much geopolitical uncertainty and that will come to a
02:47 fore as the election comes closer. So that's why we're a little bit cautious still. Interesting. Well we've been hearing from
02:53 some of my guests during this slot Rebecca that they expect the rally to broaden out. I think many people do see a lot of
03:00 opportunity in A.I. and think that that's the future. But what's your take on whether or not we might see some outperformance
03:07 or at least some catching up by other stocks and sectors in the market beyond technology. Yeah I did see some broadening out
03:15 in consumer staples which also also is recessionary. You know when you start to see like the durables and you know and the
03:22 staples you know outperform you know what services and you know luxury items and you start to say what's happening here. So
03:30 what we're starting to see is with credit cards and you know rates be balances being so high rates up so high and we're seeing
03:36 auto delinquencies and credit card payments becoming delinquent. We know there's really so a bifurcated economy because
03:41 and there's still really a lot of people that have that are still using services still going vacation still buying luxury
03:46 items. Those are the haves. But then there's a large part of our country that has got two jobs and they're really really
03:52 dealing with this inflation. It's really becoming difficult for them. So it is a very much still bifurcated economy. And yet
03:58 yes we will see broadening out. But that could just be recessionary in terms of consumer staples and things that people must
04:04 buy even when recession comes. So what we see broadening out or what we see geopolitical effects. I'm really more concerned
04:10 this year about the geopolitical effects as we get closer to the election and not really having a severe impact on the world
04:16 actually and certainly our U.S. market. Talk to me more about that. What your expectation is when it comes to some of those
04:21 challenges. Rebecca and how that would impact stocks. Well I just think any kind of escalation. We obviously know that we've
04:29 had this Ukraine Russia situation happening. It's the two year anniversary in February this last month. So it's been a while.
04:35 But we do see different things happening now. Some escalation look what happened with the Moscow attack last week. So that's
04:41 an escalation. We still have the Middle East and then we have China's moves towards Taiwan which seem a little more hostile
04:47 than we're used to with planes and things. So any any kind of escalation in the Middle East in the Ukraine Russia or even
04:54 China Taiwan any of those situations would make the market pause and think geez are we headed towards some kind of global
05:01 conflict that we aren't prepared for. Any kind of World War Three talk in the market is going to get very very freaked out.
05:07 Then there's other things that are happening as we move closer and closer to the election. You know all these things happening
05:12 with former President Trump in New York and the seizure of property. And that's really causing some consternation with
05:18 business people and entrepreneurs and companies in New York. How is that going to play out. Is that a headline risk. That's
05:24 too great for hedge funds and institutional money for investment in New York. So we just have a lot of unusual things
05:30 happening as they always do. Kristen in an election year which means that the market is going to be a little more volatile
05:36 than we would normally expect in a 2024. And how should investors plan for that. Right. I mean we've seen what's been a
05:45 solid run. And I mentioned earlier five straight months of gains is what we're looking at here. Consecutive gains in the
05:52 market. You called it. You know we're right near a top. So do you put money in now perhaps some volatility in April
05:59 expecting perhaps that we get a rate cut in June. How does the rest of the year play out in terms of when investors might
06:07 expect some of those volatile bouts. Yeah I'm absolutely expecting April to start to get quite rocky. And I think that's
06:15 where we will have some dips and we'll have some buying opportunity. Don't forget the corporate blackout window is not
06:20 buying right now. We're in a blackout period for buybacks until April 26. We don't have that institutional money that's
06:26 going to stay and kind of buoy any volatility and cover over it. So it's really down to the retail investors right now. And
06:32 they are the ones that obviously and unlike the machines get very skeptical very quickly. And so any kind of news that is
06:39 not great is an even PCI on Friday. You know this kind of thing is going to start seeing some volatility concerns which
06:45 will give us some dips. And that's where we will have some buying opportunities. I would also encourage investors to
06:50 really look at you know stalemates that are that are safe stalwarts. That's what I meant through any kind of recessionary
06:58 times which would be gold like we're seeing gold having its highest run up ever to all time highs because a lot of the
07:05 central banks are still buying them. A lot of countries a lot of sovereigns are saying hey you know what there is some
07:10 kind of concern here about global credit. So let's buy some gold and have some hedges. So I would encourage people to
07:16 look at both waiting for dips and buying some opportunities. A.I. is a long runway but it's a long term hold with
07:22 volatility. And then when you see volatility by the dips but also look at maybe some hedged commodities like gold.
07:28 Interesting. What's your take on cryptocurrency. Rebecca we see Bitcoin believe it or not even as the stock market's down
07:35 fractioning today Bitcoin is up 2 percent. Bitcoin has got a long runway. Love Bitcoin. I think you know decentralized
07:44 cryptocurrency is going to be here to stay. The institutional investment through ETFs has broadened out. It's
07:50 democratized people buying Bitcoin. They think it's more safe now even though it's not changed at all. It's just that it's
07:55 institutionally available. So that is increasing demand. And don't forget Chris and we have a having next month is April
08:01 19th. It goes from six point two five bitcoins per mine to three point one two five. So we are going back down to our
08:08 another having. And so that means the supply is going to shrink. Demand is higher. So Bitcoin has a long runway. It's going
08:13 to it's going to be a long term hold. Don't expect to get rich overnight. But I think people will be happy if they buy
08:18 Bitcoin and stay with it. I wouldn't make it you know so speculative. So I wouldn't do massive amounts of Bitcoin. But I
08:24 still do think that should be part of your portfolio as well. Yes absolutely. All right. Rebecca Walls our founder and CEO
08:29 of Walls or Wealth Management.
08:30 Rebecca, thank you.