Money Life with Chuck Jaffe

Elliott Gue, editor of the Energy and Income Advisor newsletter, says in today's Money Life Market Call that even after the good year that energy stocks had in 2022, the sector has just started its first steps into a 'multi-year super cycle' driven by supply shortages caused by a lack of investment capital put into the sector over the last eight to 10 years. Gue says he expects 'significant outperformance from energy stocks versus the broader market,' continuing the results from 2022 for years to come. In The Big Interview, Giorgio Caputo, senior fund manager and head of multi-asset strategies at J.O. Hambro Capital Management, is worried about how central banks and markets will respond to rising commodity prices, which could lead to the return of six-dollar gas prices later this year; Caputo says that he is mindful of the risks facing long-duration assets if there is indeed another bout of inflation. That condition also would be a headwind for growth stocks, technology companies, utilities, bond-like equities and more. Also on the show, Dana Peterson, chief economist at The Conference Board, discusses a recent survey of corporate chief executives whose biggest worry for the year ahead is recession.

Steve Sosnick, chief market strategist at Interactive Brokers, says that the key disagreement in the market right now -- the one that it struggles to price in -- is when the Federal Reserve will stop raising rates and start cutting rates. Until there is some clarity there, the market will continue to struggle, and investors should be eyeing earnings season to see what it says for the strength of the economy and what it signals about a potential recession. Jeffrey Bierman, founder of TheQuantGuy.com, says that he expects the next set of economic data to sound a downbeat note that will turn the market from a soft rally toward six months of trouble that will end in the fourth quarter with a rally. And Axel Merk, chief investment officer of the ASA Gold and Precious Metals, says that the market is pricing in a recession already, but that assumes the Fed will get its moves right; he says there could be significant volatility if the central bank struggles to achieve its goals, and notes that gold is being embraced now because it tends to lead into recessionary times. Plus, in the Market Call, David Brady of Brady Investment Counsel talks growth stocks in a low-growth environment.

Jason Vaillancourt, global macro strategist at Putnam Investments, expects a recession that impacts corporate earnings more than it does Main Street, though the downturn he foresees is not immediate. Vaillancourt expects the market to be messy, even though he does not think the market will make new lows much beyond the worst of 2022, but he thinks the market will suffer due to the pressure on corporate earnings. Vaillancourt likes international markets right now, notes that there is a wide dispersion of earnings but the conditions in Europe are relatively cheap compared to the United States. The ETF of the Week features Tom Lydon, vice chairman of VettaFi discussing the JPMorgan Equity Premium Income fund, which Chuck bought after it was discussed in the segment a few years ago, but which he sold recently during tax-loss harvesting season. And in the Market Call, Jason Browne, president at Alexis Investment Partners and manager of the Alexis Practical Tactical ETF says that international funds are looking good to him for the first time in decades, but notes that he also sees opportunities in domestic markets as they bounce back from 2022's down year.

Veteran money manager Bob Doll, chief investment officer at Crossmark Global Investments has been making 10 forecasts for every new year since the 1990s and he unveiled his 10 predictions for 2023 today, calling for a shallow recession that is followed by an equally shallow recovery before year's end. Doll says inflation will fall by a good amount but not get near the Federal Reserve's target rate of 2 percent, which leaves the market caught in the middle hoping that the central bank will change its policies to appease the market. He doesn't think the Fed will back off, especially when it comes to moving interest rates up to 5.5 percent, where he thinks they will remain into 2024. Also on the show, Ed Carson, news editor at Investor's Business Daily, discusses the mixed bag of results from the latest IBD/TIPP Economic Optimism Index, and Tom McIntyre of McIntyre, Freedman and Flynn talks about investing in stocks while reacting to the news in the Money Life Market Call.

Patrick Luce, economist at ITR Economics says that the slowing cycle the economy will be going through this year will result in a hard landing late this year and into 2024. Luce still sees the consumer being in good shape to help power the economy along, which is why he expects the recession to be mild and reminiscent of the mid-1990s. Still after a recovery that will run most of the second half of this decade, Luce says the market is headed for real trouble -- another Great Depression -- in the 2030s. Dan Zanger, chief technical officer at ChartPattern.com offers some short and intermediate optimism, noting that the first week of the year tends to portend the action for the entire year and 2023 got off to an optimistic start. Zanger sees the best current opportunities in international stocks, particularly some big-name companies in China. Also on the show, Chuck answers a listener's question about taking an annuity or a lump-sum as they leave behind an employer who offered them a pension settlement, and Abby Davisson, co-author of 'Money and Love: An Intelligent Roadmap for Life's Biggest Decisions' joins Chuck for The Book Interview.

Bill Adams, chief economist at Comerica Bank, says the end of the overheating economy is drawing near, which is why the economy will continue softening early this year, setting up a rebound once the Federal Reserve starts cutting interest rates which he expects to happen in the fall. Adams expects the Federal Reserve to have two more rate increases over the next two months, driving down economic activity as a result, ultimately delivering the drop in inflation that the Fed is aiming for. Also on the show, Charles Rotblut, editor of AAII Journal, discusses investors sentiment and which investment strategies held up best for individuals during the downturn of 2022, Silvio Tavares, President and CEO at VantageScore talks about the average American's credit score and how it is trending now that inflation and interest rates are running at their hottest levels in decades and, in the Danger Zone segment, David Trainer of New Constructs explains why pet-supply retailer Chewy is a barking dog of a stock right now.

Frank Holmes, chief executive and chief investment officer at U.S. Global Investors, says he believes the stock market could drop by as much as 25 percent this year before rebounding late, saying that stocks could end the year down 10 percent, although with positive surprises they could find a way to finish the year in the black, maybe even by double-digits. That surprise would depend on how quickly the market processes the turn in the economy, which he sees as transitioning toward better times with the worst of the high inflation/rate-hiking cycle now in the past. Cheryl Pate, senior portfolio manager for Angel Oak Capital, also talks about the economy, noting that it's late in the cycle for rate hikes, but still early in the cycle for profit expansion amongst banks and financial-services companies, which historically benefit from high-rate markets. Also on the show, Michael Gayed, portfolio manager for the ATAC Funds talks about how 2022 was an 'outlier' year statistically, and what that means for investors looking for guidance from technicals on when to favor stocks or bonds moving forward.

Greg McBride, chief financial analyst at Bankrte.com, says he expects the Federal Reserve to raise interest rates by a full percentage point but to then hold the line for the rest of the year once that hike is in place. McBride was careful to note that he does not expect the Fed to backtrack and start cutting rates at all this year, even as it sees inflation start to ease. That environment -- higher rates but declining inflation -- will create opportunities for savers using high-yield banking instruments. Also on the show, legendary money manager Ralph wanger -- a small-cap ace who ran the Acorn Fund for more than 30 years -- notes that 'Bear markets exist to destroy the stupidities of the previous bull market' and talks about how the current market is in the process of unwinding those excesses. Plus, Tom Lydon of VettaFi goes international with a trending pick as his ETF of the Week, and portfolio manager Andrery Kutuzov of Seven Canyons Advisors talks stocks in the Market Call.

Brian Levitt, global market strategist at Invesco, says that he expects 2023 to be when inflation and interest rates start coming down, which will not be comfortable to digest but he says he expects the stock market to get through it and finish the year higher, overcoming a brief mid-year recession -- and possibly giving up some late 2022 gains as a volatile market bottoms out -- to register a 'better than sub-par year.' Also on the show, Joe Wiggins, author of 'The Intelligent Fund Investor: Practical Steps for Better Results in Active and Passive Funds' and, in the Market Call, Noland Langford of Left Brain Wealth Management talks about where he is finding growth and how corporate bonds have a chance to replace fast-growing companies as a safer, more reasonable way to navigate current market conditions, at least until the market can navigate the current rate and inflation environment.

Rob Arnott, chairman and chief executive officer at Research Affiliates, says that the Federal Reserve has made 'a series of mistakes' that he expects to continue with a pivot away from rate hikes that occurs too late to stop a recession. Still, Arnott believes that slowdown is already priced into the market, meaning that the worst of the bear market -- except for any last capitulation meltdown -- is behind us. Still, Arnott is not ready to invest much in domestic equities now, noting that he'd favor international and emerging markets stocks because they're better values and those markets seem to have already passed the 'peak fear' point that makes them more attractive than a U.S. market that's not quite there yet. Arnott also notes that value stocks are 'in their cheapest quintile in history,' making them a place for investors to turn once the market reaches the full-on buying stage again later this year. Also on the show, in the Market Call, Mark Travis, manager of the Intrepid Capital Funds, discusses the benefits of investing in companies that make beer, shoes and underwear.