Money Life with Chuck Jaffe

Jeff Spiegel, U.S. head of iShares megatrend and international ETFs at BlackRock, says that high inflation is not a megatrend that will last decades, but it has created an environment in which investors will want to be more selective, looking for compelling reasons for long-0term growth. Specifically, he identified infrastructure and clean energy plays, health-care innovation and cybersecurity and robotics as industries with the juice to grow now but the potential to keep growing for decades. Also on the show, Rachna Ramachandran, an analyst on the high-yield strategies team at GMO, says that junk bonds yielding 9 percent today are priced as if default rates could reach 14 percent, dramatically higher than even the most bearish observers expect, which ultimately is making it worthwhile for investors to take on more high-yield risk. And Chuck goes Off the News with veteran financial columnist Allan Sloan of The Washington Post, who notes that the storied stock winners of just a year ago -- the FAANG stocks most notably among them -- have turned into today's biggest losers.

Victoria Fernandez, chief market strategist at Crossmark Global Investments, says that while there are real positives to take away from recent market activity, the lag effect from Federal Reserve actions will slow growth, earnings and profit margins sufficiently to create a small recession in the spring or summer of 2023. She recommends selectively managing portfolios to add balance, but warns against "taking wild swings at this market because things can change too quickly and you'll get caught on the wrong side of that." Veteran technical analyst Martin Pring of Pring Turner Research says that most of the indications he is seeing on the secular trend are negative right now, which is why he is keeping powder dry waiting for signs that there is more potential for real upturns rather than short bear-market rallies. Plus, Vern Sumnicht, chief executive officer at iSectors.com, makes his debut in the Market Call talking exchange-traded funds.

Amber Fairbanks, portfolio manager at Mirova on the firm's global sustainable equity strategy, says that she thinks a recession is coming, likely early next year and while she expects it to be mild, investors and experts are mostly guessing at that because there is no real precedent for the kind of high inflation, rising rate environment we are seeing today. Fairbanks, speaking in the Market Call segment, also talked about sustainable equities, which is a good comparison for the Big Interview segment featuring Venk Reddy, chief investment officer for sustainable credit strategies at Osterweis Capital Management, who also noted that market conditions are going to favor active managers who can separate the worthy credit investments from the ones that will get caught up in negative market conditions. Plus, David Trainer of New Constructs revisits a recent Danger Zone pick that he says has joined the walking dead of zombie stocks, and Christian Mitchell discusses a recent Northwestern Mutual survey showing that investors now believe they will need $1.25 million -- more than ever -- to retire comfortably in the face of current inflationary pressures.

Bill Stone, chief investment officer at Glenview Trust, says that buying smart in the stock market requires making investments when they feel bad, which despite this week's rally is still the case today. He foresees some recessionary troubles for 2023, but thinks the recovery from a bear market will be "normal" and likely accomplished within two years. Thus, even while he warns that earnings and conditions will look worse in the short run, the long run will benefit people who keep investing now. Likewise, Buck Klintworth, senior vice president at Chase Investment Counsel, thinks that the overwhelming evidence in the market is that this week's rally is not the start of a new bull market, but rather is a reprieve in a downturn that has longer to run. He too believes that there are good opportunities among some sectors that don't look great in current conditions, but which might lead the way next year. Also on the show, Mitchel Penn of Oppenheimer & Co. discusses the ups and downs of business development companies in the rising-rate, high inflation market, and David Miller of the Catalyst Mutual Funds talks about insider buying and selling and its influence on certain stocks in the Market Call.

Thomas Winmill, manager of the Midas Fund and the Dividend and Income Fund, says that investors have to adjust their psychology to recognize that it is a preserve of value, and while it has struggled this year in its traditional role as a hedge against inflation, it will hold up well against bonds, where investors have been lured by higher yields that look good but can't keep pace with inflation. Winmill says central bankers around the world have been buying it and that they have a good track record for timing a recovery, which he thinks will happen gradually ove the next three to six months as the dollar weakens. Winmill notes that investors who have tried to use cryptocurrency instead of gold as an inflation hedge have suffered much larger losses than gold investors this year. Also on the show, Tom Lydon of VettaFi.com takes an unusual step -- pegged to this week's election -- as his pick for ETF of the Week is influenced by politics, and Mike Bailey, director of research at FBB Capital Partners, talks about "beat and raise" stock investing in the Market Call.

Joe Kalish, chief macro strategist at Ned Davis Research, says that the Federal Reserve will begin scaling back its rate hikes by March, creating a good environment for bonds and cash to generate a real return with minimal risk. But first, he says the stock market will likely rally down the final stretch of 2022, but that because the stock market has never bottomed ahead of the start of a recession he expects a reversal that takes out the lows before the Fed pivots and the market can start a slow recovery during or after a mild recession in mid- to late 2023. Also on the show, Ed Carson, news editor at Investor's Business Daily discusses the latest IBD/TIPP Economic Optimism Index and how the crush of rising prices at the gas pump outshined the euphoria from dramatically rising stock prices in October, leaving investors feeling more down in the dumps than ever, plus, in the Market Call, Tom Plumb, chief executive officer at The Plumb Funds, talks stocks and valuation and market changes in the current high-inflation, rising rate environment.

Jeffrey Cleveland, chief economist at Payden & Rygel, says that inflation could begin dropping next year while unemployment remains low, conditions which run counter to the traditional recessionary playbook. He says that the reasons for inflation over the last few years could be unique to the Covid era -- fiscal stimulus, unusual supply chains, a shift in how people spend money moving from services to goods, war in Ukraine and more -- which could set up "a great scenario" and a potential soft landing. He sees the economy side-stepping recession until late next year or 2024, and sees strong potential investment opportunities in the interim. Also on the show, David Ellison, portfolio manager covering the financial services sector for the Hennessy Funds, says that Wall Street is in recession but the rest of the economy isn't, and while Wall Street wants that kind of pain -- because a recession is good for Wall Street -- he doesn't see that kind of downturn materializing right now, agreeing with Cleveland that low unemployment and other conditions make the current downturn very different than the great financial crisis of 2008. Plus, Ted Rossman of CreditCards.com returns with the site's look at retail store charge cards, which now have an average interest rate nearing 30 percent, a new record.

Adam Ballantyne, senior analyst at Cambiar Investors, says the Federal Reserve needs to keep talking as if inflation is far from over because their job is to dare us into a recession or near recession to cure the economy's problems, but he notes that "The reality is we might be peaking right here." Half of the inInflation is driven by housing, energy and medicare costs, and Ballantyne says those items do appear to have topped or are near to it, meaning "It could very well be the case that the next Fed rate increase is the last one." Ballantyne believes that the economy can also post a reasonable recovery from the current troubles, because consumers are not overextended, so they will be ready to participate once they are certain that prices are again under control. Also on the show, Ted Rossman from CreditCards.com discusses the pitfalls that consumers have experienced and worry about when lending money to friends and family, David Trainer, of New Constructs revisits his troubling take on Shopify, which he puts squarely in "The Danger Zone," and Herb Greenberg, senior editor at Empire Financial Research, discusses his annual takedown of Medicare drug pricing and how consumers can fight a system that works against them every year to the tune of hundreds or thousands of dollars.

Shep Perkins, chief investment officer for equities at Putnam Investments, says that once the Federal Reserve sees an uptick in unemployment and the economy slowing and cuts back on rate increases, the stock market will find a bottom and begin a sharp recovery once the all-clear is sounded. While investors will need to be patient waiting for that rebound to start, Perkins says there are plenty of compelling values for patient investors who are willing to wait for investments made into today's bad news to pay off in tomorrow's profits. Also talking about compelling values on today's show is John Cole Scott, chief investment officer at Closed-End Fund Advisors, who says that today's rate uncertainty has created attractive entry points for some municipal-bond funds because they are trading at big discounts and, in many cases, have gone through a dividend cut, which reduces the potential for another cut moving forward. Plus, Jeffrey Hirsch, editor of the Stock Trader's Almanac, says the market has reached a sweet spot just as investors are feeling most crunched. Between the historic effects of the calendar -- when November starts the market's best six-month period historically -- and the impact of mid-term elections and more, Hirsch sees the market rebounding from its current recession/bear market posture, with strong potential for 2023 to be a good year for investors.

George Bory, chief investment strategist for fixed income at Allspring Global Investments, says that the Federal Reserve's forth jumbo rate hike of the year -- announced yesterday -- is not likely to trigger a deep inflation, but the central bank did leave consumers wondering just how effective the rate hikes will be at slowing and ending inflation. - hiking activity will end or, at least slow, the rise in consumer prices. Bory adds that while higher yields are not great for all financial assets, they do help fixed-income investors to generate a reasonable real return now. Tom Lydon, vice chairman at VettaFi also delves into interest rates by making a short-duration bond fund his pick for ETF of the Week honors, andi n the Market Call, Simon Lack of SL Advisors returns to the show to discuss energy infrastructure and pipeline companies.