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00:00Matt Orton, head of advisory solutions and market strategy

00:03and chief market strategist at Raymond James Investment

00:07Management, joins in from Florida.

00:09Hi.

00:11Your initial thoughts, it's not looking very good, is it?

00:16No, it's never fun to wake up on a Monday morning

00:19and see the extension of the sell-off.

00:23Right, absolutely.

00:24So what is your expectation from the day today,

00:27the Nasdaq 100 futures already indicating perhaps

00:30what could be the index's worst open in four years?

00:34Now, also break down for us what is leading up to this.

00:40Of course, the jobs data was very, very poor apart

00:42from that.

00:44Japan didn't do too well as well.

00:47So is that a tailspin effect that we're

00:48seeing from that from the Asian markets?

00:52So I think when you take a step back from all of this,

00:54it's important to put the totality,

00:56to steal a word from Jerome Powell,

00:58the totality of all of the data and all

01:00of the different moves into context.

01:02Because I think what really started

01:05a lot of the jitteriness in the market

01:07really goes back a month ago to the big rotation

01:10that we had in the US moving out of mega caps

01:13into small caps, into more cyclical names.

01:16I mean, literally just a month ago,

01:17we were all enthusiastic that the growth story was intact,

01:21that the economy was going to have a soft landing.

01:24And now we've received some data points

01:26that I think has thrown that narrative into question.

01:29At the same time, you're seeing the unwind

01:31of a $10 trillion plus carry trade with the yen

01:34and the BOJ further spooked markets last week

01:37by increasing rates by 25 basis points.

01:40So I think a lot of investors have

01:42been caught off sides on multiple fronts

01:44of different trades.

01:45And you combine that with thin summer liquidity,

01:48it just is a recipe for really, really big moves in the market.

01:52When you see the NASDAQ down 4% or so,

01:56it's incredibly uncommon.

01:57It never feels good.

01:59But I think it's important for longer term investors

02:01to sit back and ask what fundamentally has really changed

02:06to justify these moves.

02:08I would say there hasn't been that much

02:10from a fundamental perspective that has changed my opinion

02:13with respect to a soft landing in the US.

02:17And so I'm looking for a little bit more calm

02:19to come back to the markets.

02:21And that's when I wanna start using this opportunistically.

02:23We haven't had a chance to put money to work in a long time.

02:27So for all of those investors

02:28who've been sitting on the sidelines,

02:30saying I need a better entry point to put money to work,

02:33this is it.

02:34So I'm telling investors they should really be getting

02:36their shopping lists ready

02:37because we will have a good opportunity

02:39to put money to work over the long term.

02:43Good morning, Matt, Murali here.

02:46We can keep the shopping list ready,

02:47but before that, I just want to,

02:49before I ask you a question,

02:51I think the US markets have opened,

02:52the cuts are very sharp.

02:54You can see them on the screen.

02:56Amazon is down about almost 10%.

02:59Apple is down 10%.

03:00Almost, I think the worst fall in four years.

03:03And you can see on your screen,

03:05multiple indices, stocks,

03:08whether it is Alphabet or Tesla, name it,

03:11they are all sharply down.

03:13My question is, it started in US,

03:16went to Asia, and then went to Europe.

03:19Now it's back in US.

03:20Is this a contagion?

03:24I don't think it is.

03:25I think, at least in the short term,

03:28there's been a lot of technical damage done to charts.

03:30And we're in that cycle where I think you have some algos

03:33that are driving a lot of the trading activity

03:35taking off of these hues,

03:37but there will come fundamental levels

03:39where investors and real money

03:41is going to come back into the market and say,

03:43some of these stocks, the mega caps being down 10 plus%,

03:47in a single day after already being down 10 plus%,

03:51one or two days in the last week,

03:53the forward multiples start to look

03:55really, really attractive.

03:56And again, I think there's a lot of money

03:59that's just been sitting and waiting.

04:00So I think a floor is going to come,

04:03but until the algos are put back into control

04:07and you have real money starting to guide the markets,

04:10I think you're going to see this whipsaw effect

04:12start to take effect.

04:14What I'm looking for most

04:16is do we violate the 200 day moving averages

04:18on some key charts?

04:20Is that going to be a harbinger of some further downside

04:22before money starts to come back in?

04:25But I don't think this is going to be a contagion

04:28where you continue to see sell-off after sell-off

04:30in global markets,

04:31because money's going to come back to work.

04:34Okay, so you seem to be very optimistic

04:36and hopeful that money will come back to work

04:38and it is not a contagion.

04:41Hopefully it is not,

04:42but what will it take for the markets to calm and come back?

04:47Do you think a good word from Fed or somebody,

04:51one of the Fed governors has also pointed out

04:54that Fed will do whatever it takes

04:57and the usual routine line.

04:59So what will it take for this relentless selling

05:05to calm down and investors to calm down?

05:09So I think any sort of good economic data

05:12is going to be helpful.

05:13Unfortunately, we don't really have too much of note

05:17until you get to August 14th,

05:19where you've got the CPI in the US.

05:21I think that's going to be really important,

05:23but we do have some points this week

05:25that are going to be worth following.

05:26You have ISM services.

05:29I think following the employment component of that

05:31is going to be important.

05:33We're going to have the senior Fed loan officer surveys

05:36later this week on Thursday.

05:38I think not seeing credit deterioration,

05:42willingness of banks to lend money,

05:43I think all of that might give a little bit more confidence

05:47to people that things aren't really that bad,

05:50or at least as bad as the market is signaling them to be.

05:53And I think if you get those little confidence steps,

05:55that will give some people the willingness

05:57to start to step in and start to put money

06:01to work in this market.

06:03Right.

06:04There are some very, very smart investors

06:06who have moved to cash.

06:08There were reports suggesting that Berkshire

06:12and Warren Buffett had moved to almost $290 billion in cash.

06:15What's your assessment?

06:16Are many people sitting on cash?

06:18And what we are seeing now is simply a speculative position

06:23cut that is bringing the fall.

06:26You know, that's a really good point

06:28because a lot of investors have been overweight cash.

06:31I've been telling a lot of our investors,

06:34at least over the past couple of months,

06:35that they should be using the current levels

06:37of interest rates to lock in income going forward.

06:41And that's been the right call,

06:42especially given the massive backup we've seen

06:44in treasury yields over the past few weeks.

06:46And I still think there's opportunities

06:48for investors to do so,

06:50because we know what cuts going to be coming.

06:52The question is just how big is that cut going to be?

06:55So remaining in cash is not the trade.

06:58Whenever you start a rate cutting cycle,

07:00cash unambiguously underperforms in every single case.

07:04So I think investors who are moving there

07:07are doing it more from a positioning standpoint.

07:09They're taking profit on some trades

07:11and looking for other opportunities,

07:13which isn't a bad idea in this sort of market.

07:16But I think a lot of that cash, to my point earlier,

07:18is going to need to find a home.

07:21And when you see some stocks that are down 10%

07:24that have rock solid balance sheets

07:26and just posted good earnings,

07:28that's a good opportunity to start

07:30to maybe redeploy that money and put it to work,

07:33especially if you do get a little bit of encouragement

07:36from the economic data.

07:38A quick question on the geopolitical side of it.

07:43Are we seeing an impact of the tensions

07:45between Iran and Israel, perhaps?

07:47And what's your sense of that?

07:49I think that's helped add some, dare I say,

07:51stability to the energy markets.

07:53You haven't seen oil completely roll over

07:55to the degree that you've seen

07:57the rest of the commodity complex.

07:59I think it just injects another element

08:02of uncertainty into this market.

08:03You have uncertainty coming from a lot of trades unwinding.

08:07You're heading into a very busy election season in the US,

08:10and now you have rising tensions in the Middle East.

08:14I think all of that just makes this recipe

08:17for more volatility, at least in the short term.

08:20But I don't think it, that I think is an aside.

08:23It's more related to just the energy complex.

08:25And I don't think that is what's causing,

08:28or at least it's very marginal to impacting

08:31the overall red we're seeing

08:32across the rest of the equity complex.

08:35Right.

08:36If I circle back to your point that you made,

08:39whenever interest rates are cut,

08:41so when will that cut come?

08:44You know, the Fed chair was not really very clear

08:46whether it'll come in September or November.

08:49We really don't know.

08:50But will the current, if I may call it crisis in the markets,

08:54force the Fed to call for an emergency meeting

08:57and announce a cut?

09:00You know, there's been some talk of that,

09:02but I think that would send a really dangerous signal

09:04because the Fed is having an emergency meeting.

09:07Things really must be worse than we think

09:09if that's actually going to happen.

09:12I think September, my base case

09:14before a lot of this data was December.

09:16I've pulled that forward.

09:17I do think we're going to see a cut in September.

09:20I don't think we're gonna see a 50 basis point cut

09:23unless there's really sharp deterioration

09:25over the next couple of data prints we're gonna get.

09:28In advance of that, I think Powell set the table

09:31during the FOMC last week to have a cut in September

09:36as long as the data cooperates.

09:37I think the data is cooperating with him on that front,

09:41but to get a 50 basis point cut,

09:44to get an emergency cut in front of that,

09:46that's going to require a massive revision

09:49to their summer economic projections.

09:51It's going to really,

09:53I think it would send a very, very negative signal

09:55as to the reasons of why we're cutting.

09:57And I think, again, that's why I would argue,

10:00I think the market's gotten ahead of itself

10:02in pricing 100 basis points of cuts

10:04before the end of this year,

10:06and a full 300 before the midpoint of next year.

10:09That's extreme.

10:10And I just don't see the hard or soft data points

10:14saying that things are that bad in the economy

10:17that we need to have that happen.

10:19You look at earnings,

10:20you look at what companies are telling us real time

10:23with respect to their results.

10:24We're getting double digit year over year earnings growth.

10:27We're seeing a broadening of that growth across sectors

10:30and guidance has been pretty good across the board,

10:33even in cyclical parts of this economy.

10:35So that gives me a little bit more solace

10:38that the foundation,

10:39the fundamental foundation still remains in place.

10:43So Matt, you think, of course,

10:45there's a lot of overreaction at play over here.

10:47Any final thoughts?

10:49So I would tell investors

10:51when we start to get a little bit of stability,

10:53start to look at some of the mega caps,

10:55because again, I would argue they aren't back defensive

10:58given their earnings stories.

10:59Look at some of the higher quality cyclicals

11:02like industrials that are levered to AI cap X spending.

11:06Those areas we continue to see increase

11:08from the hyperscalers.

11:10There's tons of opportunity across this market

11:12and investors should use this pullback

11:15to build a balanced portfolio going forward.

11:19All right, Matt Orton,

11:20appreciate your joining us on the broadcast this evening.

11:24Thank you, good to see you.

Microsoft Falls 4.6%, Declines Most In 21 Months | NDTV Profit

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