Economic Implications of Israel-Hamas Conflict & Fed's Future - A Conversation with Charles Lieberman

[00:00:05] Safety was all the word on Wall Street today. As we saw bond yields hit 4.9% on the 10-year treasury and stocks sold off. A big sell-off of over 300 points down on the Dow Jones Industrial Average. What's next? We really don't know.

[00:00:20] There's so much uncertainty and everybody knows about it, but welcome to Buy Hold Sell. We're here to answer everything for you. I am your trader Todd Schoenberger, and I'm joined by my friend and co-host Tobin Smith out in sunny and somewhat warm Scott Stout, and I'm your owner.

[00:00:36] People are still playing golf, so that's all I know. But we have a very special guest with us today. We have a Wall Street legend, Charles Lieberman. He is the CIO and managing partner of Advisors Capital Management. Chuck, welcome to Buy Hold Sell.

[00:00:50] Thank you Todd. Happy to be here. Thank you. Well, let's start off with the big news of the day. President Biden, he went to Israel. They had to cancel. I know the King of Jordan was supposed to meet with him. That's not going to happen.

[00:01:04] Biden is doing, I guess, what we really want him to be as a leader out there, and he is. He's doing what he needs to do. But there's so much unrest in the Middle East right now. And you had a terrific piece.

[00:01:16] I read a couple of your articles this afternoon, and I saw one that's on the AdvisorsCapital.com site that talks about what this war that's happening between Israel and Hamas, and the economic downfall that could actually be triggered from this,

[00:01:31] particularly since so much natural gas is exported off of those shores. Chuck, what do you think? I mean, because this could have dire consequences, really not just worldwide, but clearly for the US markets.

[00:01:43] But I mean, is this something that's just a knee-jerk reaction or is it something we need to be cautionary about? It's more of a knee-jerk reaction at this point. It has the potential to blow up into something a lot more serious.

[00:01:57] But there's no production of natural gas in Gaza. There is offshore Israel, and that could be disrupted. In fact, it is going to be disrupted because they've shut down those platforms. But Israel is not yet a huge supplier of natural gas to the Western world.

[00:02:16] They're a bit of a supplier to Europe through Egypt. They ship natural gas to Egypt, and then it gets liquefied and sent to Europe. But the amounts involved are relatively small.

[00:02:27] The real risk is if the conflict blows up much more and Hezbollah in Lebanon gets involved on behalf of Hamas. And then there's the risk that Iran could get involved.

[00:02:40] That's the first real risk. And I don't see Iran doing that, so I don't think this becomes significantly worse in terms of the economic side. Yeah, it's hard to check it. I mean, it's hard to game plan this one.

[00:02:53] I remember I was part of an IPO in, I kind of, 2005, 2006. We're all ready to go. We're going. And then Lebanon, in fact, Israel, or Israel invaded Lebanon to resort. You know, the Middle East has always, from a stock market standpoint, been benign until it's not.

[00:03:14] But what makes you so sure that Iran is, I mean, first off, Wall Street Journal reported that Iranian officials were with the Hezbollah and the Hamas group, you know, planning this thing.

[00:03:28] Obviously, the United States has communication detection equipment that has heard those phone calls, heard the, you know, the sell the wires, like, yada, yada.

[00:03:38] I'm not personally, I'm not so sure that knowing my friends in the Israeli Air Force that there's a point of which they would go after Iran. Am I just overdoing it?

[00:03:50] Well, I would, I think Israel would welcome the opportunity to take out the nuclear facilities that are being built in Iran. And that's precisely why I think Iran will not become directly involved, because that would open the door to exactly that possibility.

[00:04:08] I think Iran will continue to work behind the scenes. They'll push their proxies. That's what Hamas is. And they could push Hezbollah into the conflict as well. Hezbollah does not really want to enter the conflict from what I read, from what I understand. They know they'll get decimated.

[00:04:27] But Israel isn't want to involve either because Hezbollah is a very powerful military force. And so it's really going to be damaging to Israel. So the good news is that neither of them is looking for an opportunity to go to war with each other.

[00:04:42] And Iran, I think, is likely to stay out. But one of the natures of war is that things play out in unexpected ways. And this certainly has that capacity. Yeah. What do you think it means in terms of US Treasury bond yields?

[00:04:57] I mean, I saw some interesting speculation today that, I mean, I've been calling for the 5.25% 10 years just purely based on supply and demand. But then of course, you know, when we have a war going on, the rest of safety is by gold and by 10-year Treasuries.

[00:05:16] So that's where I'm really confused. Gold has been going up. But bonds, you know, it seems like we can't sell $200 billion with the bonds every week and have just everybody rush in and bid at par. Yeah, I'm sympathetic to that view.

[00:05:31] The way I think of it is that things like a war or some sort of turmoil, some sort of catastrophe somewhere, that sets off a flight to quality. But the fundamentals deserve a higher level of Treasury yields.

[00:05:49] Go back to where interest rates are and they need to float relative to inflation. Yeah. And so if inflation isn't is currently in the ballpark of three, three and a half percent, then 10-year Treasuries below five does not make fundamental sense to me. It's artificially low.

[00:06:09] It reflects the fact that the world is still a horrible place. And so money looking for safety goes into Treasuries. So I think those yields are still artificially low. I think there's also a mental adjustment process.

[00:06:21] People became accustomed to interest rates at zero levels or really low levels. Really nice, wasn't it, Chuck? It made our jobs a lot easier. Yeah, it was it made it very easy to borrow money for as long as the cows come home at really zero rates.

[00:06:39] It was great. But that's not fundamental. That's not stable. It's not an equilibrium. And we're working our way back towards an equilibrium. You and I are probably old enough to remember when interest rates were a lot higher and it was normal.

[00:06:53] Chuck, I started at Kitter selling bond funds to pensions. And I still remember standing up to one of the pension funds saying, listen, you idiots, if you don't buy my 14 percent 10-year bond, which if you do the reverse math,

[00:07:12] as it keeps going down, you're going to earn more in the bond market than you ever made in that stupid stock market. And they just wanted to throw me out on my ass. Chuck, how do you see the 10-year yield going?

[00:07:24] I think it belongs somewhere between five and a half and six. But that's a judgment based upon where I'm guessing inflation comes in. The more inflation comes down to lower the peak in interest rates.

[00:07:38] And a lot of this is still to be determined because you have fiscal policy that's still very expansionary. You have monetary policy that needs to raise interest rates but doesn't want to raise them so much that we push the economy into recession.

[00:07:54] So there are a lot of balancing acts here and we don't yet know how much the economy will respond to the rising rates that we've already seen. So far, the labor market is still pretty tight.

[00:08:06] And so I don't see enough of a slowdown in the underlying inflation pressures to enable inflation to come down anywhere close to the Fed's 2 percent target.

[00:08:15] But Chuck, how do you stand on the argument that I've been making a little bit here, which is simply that if, it's like if then question,

[00:08:26] if inflation was negative basically after rates were negative, but also inflation was below 2 percent for all those years because of the industrialization of China and the exporting of high priced labor, etc.

[00:08:41] If that's reversed, which it certainly is, then how could 2 percent be the target in a world where shipments from China are done 84 percent year over year in containers where costs, where labor costs.

[00:08:55] I feel like the late 70s a little bit with labor unions actually having, you know, price pricing power. Right. Isn't the world different enough that it's just insane to come up with this 2 percent malarkey inflation rate as if everything was just hunky dory?

[00:09:13] Well, that represents the Fed's objective. It's the policy objective. And if that's the objective, then one of the things you've got to get is labor costs growing no more than about 3 and a half percent because that difference will be made up by productivity.

[00:09:30] And then you can get inflation down to 2 percent on a sustained basis. And there's nothing theoretically wrong or impractical or certainly not infeasible to accomplish that.

[00:09:42] But you've got to have all of the other stuff happen, meaning you've got to get the labor market to be loose enough that wage inflation is not in the four or 5 percent area because there's no way we can offset that enough with productivity to keep inflation down to 2 percent.

[00:10:00] That won't happen. Yeah, I mean, you look at the, at just the increase in labor costs. The other thing we learned about labor costs is they never go backwards.

[00:10:10] But once you've gotten to the point and unless you have an economic crushing Federal Reserve interest rate that truly does wipe out three or four million jobs,

[00:10:21] but we still have 3.2 million more jobs available than we have people in the workforce that doesn't change with a 1 percent and the Federal Reserve has not shown the stones like, you know, our personal friend Paul Volcker at the time.

[00:10:37] And if you can't vocalize the economy, then to me this is just it's it's you're just changing excuses every month for why inflation's not coming down when I just read the math and the math says it's not. Right.

[00:10:51] And that's exactly why the Fed's line about higher for longer is compelling. Right.

[00:10:58] The Fed does not want to push the economy into recession so they won't create at least not intentionally the kind of economic conditions that would cause the unemployment rate to go up sharply and therefore inflation to come down sharply. They're trying to ease their way to it.

[00:11:14] And that means that it'll take a while. They may have to raise rates multiple times more. That wouldn't shock me in the slightest. And in the meantime, they keep on hoping they've done enough so that inflation pressures will continue to ease up.

[00:11:29] But until you see the unemployment rate rise more meaningfully, the prospects for that are pretty minimum. So I'm with you. I think chire for longer is the right way to think about it. And all of the investment consequences flow from that. Well, that's a final question for me.

[00:11:45] Then if that's the case where they're not going to take it high enough to slow down, then doesn't that change? I'd like to get into how you're investing in this space because I can tell you right now. This is my old voice in the old days.

[00:12:03] Yields that you've got, dividends that you've got made up a shocking amount of the return on the stock market for many, many years.

[00:12:12] And if we're sort of going back to normal, then I can tell you in our portfolios, we're 30% in getting my 5.25% money market account with no risk.

[00:12:22] So I think that's where about 11% dividend with dividends that come from small sectors of the world like oil tankers right now, like LPG tankers, et cetera, where there's real tight markets and they've changed how they do business.

[00:12:37] And so now instead of buying a new ship every year, 10 of them, they're now selling 10 of them and they're paying dividends and buying stock back.

[00:12:44] I think the next 12, 14 months, I'm assuming that most of my gain is if not all is going to come from more dividends and no risk yield. How about you? Well, I run one of our portfolios, one of our strategies called income with growth.

[00:13:00] And the primary objective is income growth of the income as the second objective to keep up with inflation. Sure. And so 80%, 85% of that portfolio is in equities that produce high yield. And one of the nice things about that part of the portfolio is I'm very sensitive to inflation.

[00:13:20] So I want to invest in parts of the economy that benefit from inflation. So I'm into oil and gas pipelines into business development companies. I'm into real estate investment trusts that offer good yields that will benefit from higher inflation or high interest rates.

[00:13:40] So there are a lot of ways to play it, and that's the way I'm playing it as well. That portfolio by the way these days is generating between 6.5% and 7% growths before management fees. So it's a pretty attractive yield.

[00:13:54] And it's also got some upside because these companies last year, about 70% of the holdings in the portfolio increased their payouts. Yeah. And that's what you want in an inflationary environment. And any favorite names you'd care to share? Sure. One of my favorites is a company called Energy Transfer.

[00:14:14] I was just going to say Energy Transfer. You look to me like you're an Energy Transfer guy. It's one of the cheapest pipelines out there, a tremendous runway ahead of them because of government policy. It's tough for them to spend their cash flow in reinvestment.

[00:14:32] So they really have very little choice but to use it in other ways. They've already paid down a fair amount of debt.

[00:14:40] The debt ratio is now at very good levels, which means that there are only two options now are to either buy back stock or increase their distribution. And they've been increasing the distribution of fair amount. They've also been doing a few acquisitions here and there.

[00:14:56] This is a growth income play. I like that. I like that. Listen, let's leave it there on this block guys because coming up after the break we have to ask Chuck about earning season.

[00:15:06] We've got to also talk about what the Fed, if they are going to cut rates, will they do it next year or is it going to be 2025? But we'll get into all of that after the break. So with us today we have Charles Weberman.

[00:15:17] He is the CIO and managing partner of Advisors Capital. Management can take a look at AdvisorsCapital.com, fraud, Chuck's writing, these commentaries. Excellent stuff actually. So we'll be right back after the break. Please stay with us. Bye, hold, sell brought to you by Cross Check Management.

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[00:17:40] When we saw the markets drop considerably today, down was down 1%, we saw the NASDAQ and SAP, SAP was down 1 and a third NASDAQ was off 1.6. Oil was up big today, gold was up big today, and what else was up big?

[00:17:54] The 10-year Treasury Heal topping out a little over 4.9% the highest we've seen in it since 2007, it's been sometime. So all eyes right now is what's going on geopolitically and obviously with earnings.

[00:18:09] And after the bell today, we had Netflix come out, obviously they had a big beat the stock after hours is up in double digit territory, but Tesla got slammed and they actually reported 66 cents or EPS versus 73 cents what Wall Street was expecting.

[00:18:25] But with us today we have Charles Lieberman, he is the CIO and managing partner of advisors capital management. And Chuck, when we left off at the last break, we're talking about some of the stocks that you like in your portfolio.

[00:18:38] But what about now with earnings season because there does seem to be a little bit of a stress here with some of these companies. Morgan Stanley came out and actually disappointed where the other financials did fine.

[00:18:49] But now we're in tech earnings season. What do you think on the tech side because all eyes you would think we would see things are actually popping but I'm not so sure right now.

[00:18:59] Well, the tech stocks are priced in some cases for perfection or certainly for very, very strong growth and they're certainly likely to experience strong growth. But if it's up 25% in the market was expecting a 30% pop in earnings, that's disappointing.

[00:19:17] But you can't lose sight of the fact that a 25% pop is a pretty good pop and these companies are not going to grow slowly over the next couple of years. Plenty of them are going to grow rapidly.

[00:19:29] The question is what are they priced for? And that makes it complicated. You really have to get those right. Yeah, we have an AI portfolio that's done ridiculously well this year.

[00:19:42] I always think about when I was a mutual fund manager coming into the end of October with the October 31 year end that I would be selling taking profits in ones that were up.

[00:19:56] I mean, Nvidia is up 185% for us in a world where 7% of year returns is normal. That seems a little high. So I'm taking profits there and then putting them into these high yield deals.

[00:20:09] And I think part of what we're seeing here are the mutual fund managers who are active managers essentially doing some tax swaps at the end of this fiscal year.

[00:20:19] And that's the mechanics of the market. But when you have something up, you know, jeez, SMCI which makes the racks that has Nvidia chips in them for these hyper-sailers, that stock was 124 bucks six months ago.

[00:20:34] It's now 300. I'm old enough to know that if I got 50 years of gains in six months that I am going to certainly get at least my original capital back. Then I'm going to get my 100% return of the capital back and particularly when interest rates are going up.

[00:20:52] And to me, that's what I see more of my cohort people doing. Yeah, I find those stocks extremely difficult to invest in because while they're doing well, the stocks run up dramatically as you saw.

[00:21:07] And then when something slips even slightly, the market takes them out and shoots them. And it's a very, very tough investing environment. I'm less aggressive perhaps than that.

[00:21:19] So I'm really more comfortable investing in companies that are confident they're going to grow 5, 10, 15% a year on a recurring basis for a very long time. And you know, that's my cup of tea. Yeah, well, let me tell you that tea's tasting pretty good these days, Jack. Yeah.

[00:21:38] I say I run a growth portfolio and I run an income portfolio and I just happen to sort of be an expert if you will in inflection point investing in technology and I've written a number of books on it and run a mutual fund on it, etc.

[00:21:53] So I'm very tight in and I have a group of 2000 subject matter experts that have been with me for a decade or more, and they feed me a lot of great stuff. But I'm with you at the point that to me I'm in risk reduction mode.

[00:22:09] And why on earth I couldn't look somebody in the eye who had a 250% profit in SMCI and then it misses one quarter and then it's down 100, you know, it's down 50%.

[00:22:19] To me that's that's imprudent. And I think people at home need to when I've been with I have subscribers to our newsletters. I preach every freaking week that that when interest rates are going against you and the economy is slowing, etc, etc.

[00:22:37] And stocks some of these stocks are four or five times what they were worth six months ago. Come on, man, take the profit. At least get your cost basis out and take some money off the table. It's money off the table. And I sympathize.

[00:22:51] I sympathize for my colleague who runs our growth portfolio because I think she's got a tough time to just try to figure out how to play it.

[00:23:01] Yeah, well, it's for the fourth quarter we had a number of strategists that have been one that have been, I would say other than maybe a handful that most for the most part everybody's very optimistic.

[00:23:12] For the fourth quarter, what's your take on the markets? I know we have a lot of obvious challenging headwinds with the on the geopolitical front.

[00:23:22] But with that with that standing, what do you think for the fourth quarter and then beyond because historically in the fourth quarter of a pre-election year this should be a rocking quarter for the markets. But where do you stand?

[00:23:35] Well, I don't see any real risk of a recession near term in the visible future. And that's what rocked the market in 22 and at times has been a concern of the market in 23. But I just don't see it. The economy continues to roll ahead a pretty good clip.

[00:23:53] The third quarter looks like it's going to be overly strong, really overly strong. That's a real problem for that. And that's part of why I'm nervous.

[00:24:03] The Fed may have to come back and raise interest rates and more. So I see the economy continuing to surprise to the upside because there's so much pessimism out there.

[00:24:14] And as a result, I continue to expect corporate profits to surprise to the upside. So I'm fine with stocks. I think you do have to be very selective.

[00:24:25] The high P stocks are really the ones most at risk is interest rates rise because so much of their earnings is out in the distant future.

[00:24:33] And so higher yields cause the valuations of those, the theoretical valuations to fall most. So I think there's some risk there. But there are a lot of great values in the market when the overall market is trading at 1718 times expected earnings and you exclude the magnificent 7.

[00:24:51] The 493 are trading at 1516 times earnings. So I think there's a lot of value in the market. I go fishing constantly in the range of 10 to 12 times earnings for 24. And there's a lot of great value there. Are there any cheaper sectors that you like?

[00:25:11] Yeah, exactly. What sectors in that fishing pond are you getting to? So I don't like utilities. I don't like consumer staples. They tend to trade at higher valuations. I do like a whole bunch of REITs, but you have to be selective.

[00:25:27] So for example, towers and computer centers. Those have done extremely well. The prices ran up the multiples surged. The yields declined. The companies continue to do well but the stock sur at risk because of rising rates.

[00:25:45] Then I love the ones where they threw the baby out with the bathwater. So everyone remembers what happened to the nursing homes during the pandemic. They got crushed and most of them cut their dividends.

[00:25:57] But guess what? Life is returning to normal. Occupancy in these nursing homes is rising again. Increase revenue tends to fall to the bottom line.

[00:26:11] These companies have a lot of roadway ahead of them and the stocks are still cheap because everybody got burned in them. So the multiples are low. The yields are high. You can get yields of 7 to 10% in very high quality nursing home type of REITs.

[00:26:26] And you've got some insulation from inflation because they own the real estate so the values go up and all of that. So that's a good area.

[00:26:36] Another one that I like are oil and gas pipelines. I don't like the upstream ones because they're more vulnerable to rising, excuse me, falling energy prices which will happen at some point again.

[00:26:49] The stupidity of the market is that when oil prices go down, they take the pipelines out and shoot them also. But I think their great values, good yields.

[00:27:00] You can get a company like Energy Transfer, which is one of the cheapest, one of the best position with a yield of about 9%.

[00:27:07] And growth in that cash flow and growth in that business over time. They're running out of things to use their excess cash flow for. So they're going to have no choice but to continue to increase the distribution or buy back stock. So there are lots of opportunities around.

[00:27:26] And also, you know, there's no question that tell me the last time that we had a major pipeline approved in the United States, Chuck, I'm searching my mind. You have growing production and you have less pipelines built in the last 10 years than we've had for 30 years beforehand.

[00:27:47] So now they get a scarcity value too, right? They can charge whatever they want. Once those contracts roll over, I look at all the energy transfers, contracts and some of those ones are rolling over here and they ain't going to be at the price they did 10 years ago.

[00:28:01] No, that's exactly right. The very fact that the administration fights every new pipeline or even every expansion of a pipeline or in some cases threatens to shut down an existing pipeline. It really makes the value of the existing infrastructure that much greater.

[00:28:19] And it means that they're going to be able to raise price and you're exactly right. So I'm really comfortable with a lot of those situations.

[00:28:27] One of the expectations that I have is it's going to be a continued amalgamation of these pipelines as the big ones try to acquire the little ones is another way to spend capital and to grow.

[00:28:40] And that means that all of the smaller ones are at risk of being acquired. And that's a risk I want to take. Yeah, I want to be on that side too.

[00:28:48] The actual cost of capital for them also in theory, which is going up means cost of capital is going down. But in their case they're able to finance it themselves.

[00:29:02] They're not going out and if they're borrowing money, they're borrowing money for a short period of time and then they put long term financing on it. And they have rates that come out higher because they're due pipeline. So I'm with you. It's a win-win-win.

[00:29:15] What do you do about the MLP though? What do you do about the K1s for your funds? So we do everything and separately manage the accounts.

[00:29:24] And we've basically bifurcated all of our clients into taxable accounts where we put the K1s and non-taxable accounts where we do only 1099s. Got it. And for those clients who don't want to deal with K1s, we classify them internally as 1099s.

[00:29:44] And that way we avoid the problem for them. So we handle it in that way. That's awesome. I mean at this time of year, this is where I get my managed accounts when they get a... Most of the times they have custody so they get the K1s.

[00:30:03] But I'm with you. If you do it that way, then it eliminates that problem. I'm just also... Since you're so deep into this space, I'm wondering why some of them keep the MLP structure. Why wouldn't they just go back to being C-corpsed?

[00:30:20] Does that get on your radar at all? Well, absolutely. And you've seen a lot of them actually convert from partnerships into C-corpsed. There are a couple of situations where they should, but they haven't. Perfect example, energy transfer. Kelsey... I forgot that they're an MLP.

[00:30:40] He owns so much of the shares that he doesn't want the tax bill that would come by converting. And what they're going to do, which is kind of interesting, is they're looking at creating a C-corp version

[00:30:53] so that they can pay out a 1099 to shareholders, which is exactly what Plains American did. There's PAA, which continues to pay out a K1 and PAGP, which pays out a 1099. And I wouldn't be surprised if energy transfer does the same thing.

[00:31:08] Well, then the other fun thing, finally, of course, is that pension plans can't get K1. So if you go to this C-corp structure, then you get access to, I don't know, $16.5 trillion worth of pension money that loves income and our long-term investors

[00:31:24] who are should be in these things, right? That's exactly right. All right. So before we close out the show, let's pivot back to the Fed. So you're talking about a fear of potentially more rate hikes by the Fed. Do you see rate cuts anywhere on the horizon?

[00:31:44] Not on my radar screen, theoretically, of course. The easiest thing in the world to do is to forecast the recession. And if you don't provide a date, you know you'll be right eventually because the economy goes in cycles and say, oh yes, there'll be rate cuts.

[00:32:01] But I don't see it in the first part of 2024. I certainly don't see it in 2023. It's premature to expect it. We're still trying to bring inflation down until the Fed accomplishes that. There's really no prospect for rate cuts. Are you forecasting a recession for next year?

[00:32:21] I haven't gone out to the second half of 24. It's possible. I don't see one in the first half of 24. I continue to forecast the recession, but beyond my radar screen. It's beyond my range.

[00:32:36] Well, I'm sure you look at the Atlanta Fed GDP now charts based on their data. We're going to have a recession in like 2035. So I, you know what? They've been right in a lot of ways, always higher than what it is.

[00:32:55] But I need more and more people at least follow that. One of the reasons I can't see a recession is because I'm not doing the simplistic top down, ignoring the detail that a lot of people do. So if you look at how much the Fed has raised rates,

[00:33:11] you then jump to the conclusion of recession is inevitable. But when you look at the sectors of the economy, look at the consumer sector, household debt relative to income relative to net worth is down sharply. We continue to generate lots of jobs, wages are rising.

[00:33:27] The consumer has a lot of capacity to spend and that's the biggest part of the economy. Then switch over to capital investment. The government is subsidizing green initiatives all over the place and we need to bring investment onshore so that provides a tailwind for capital investment.

[00:33:43] Then go to the housing market. The housing market is really one of the most interesting. The easiest thing to say is that rising interest rates are going to crush housing as they did in 2022, but the mix is what matters. Right?

[00:33:56] What has happened is because of the rise in mortgage rates, no one wants to sell an existing home on which you already have a low rate mortgage that forces all of the buyers into the new construction market and they have to buy there because there's just no inventory.

[00:34:12] The fact of the matter is after overbuilding and causing a financial crisis in 0708 into 09, we've now underbuilt by so much that there's a very significant housing shortage. One of the great opportunities for investment is everything related to housing, housing construction, parts, equipment,

[00:34:36] durable that go into houses, into new houses because that's going to continue to outperform vastly better than people expect. Do you even have to pull back in the stocks, at least in the residential development stocks? That's a buy, that's an opportunity?

[00:34:53] Exactly, because there's a shortage in the country. The Bull Park estimate is something like a million and a half units or more and to put that in perspective, if you're running a million and a half units, which is what we're doing roughly,

[00:35:08] and you have roughly that much demand because of growth in households, tear downs and second homes, then you need to get construction above that level to eat into the shortage and that's going to take years. The housing market is actually well poised to do quite well.

[00:35:26] If interest rates come down even slightly, you're going to see housing take off like a rock. I just wrote a report today, I didn't realize first of all, 37% of homes in the United States don't have a mortgage. 80%, 82% have mortgages that are under 4%. The idea that-

[00:35:44] And are fixed for 30 years. And are fixed, right. When people are running around with their head on fire saying, we're going to have this recession because people can't afford to make their payments and yeah, you can't find a repo man to repo those Ford 150 trucks

[00:36:04] that some idiot paid $95,000 for in the middle of the freaking pandemic. Then you got to take the outliers out. You know that better than anybody Chuck. Data is dirty until you take the outliers out and now you have the core. And when you look at the core,

[00:36:19] you know the 25% of the households that generate 78% of discretionary spending are doing just fine. So if you take out the consumer, you take out capital investment and you take out housing, there's not enough of the economy to react negatively to higher interest rates to cause a recession.

[00:36:37] So I think that a recession is not on the horizon anytime soon. Well, I'm just going to hear. Todd, I know you got to wrap it up, but it's great to get your wisdom and levelheadedness on this. And I love meeting a fellow MLP fan. Absolutely.

[00:36:53] Well, we are going to shut it down right there guys because this was fantastic Chuck. You were, you set it off today and you definitely have the, what's the pedigree I should say? Wall Street pedigree. Easy for you to say, Todd.

[00:37:09] Well, I'll tell you what, I mean, all those experiences definitely pay off because that wisdom is great for the audience. So thank you so much for joining us today, Chuck. And we definitely hope to have you back. Yeah. Thanks very much for having me, Todd.

[00:37:23] I appreciate all the kind comments. Absolutely. Absolutely. So on behalf of Charles Lieberman, who is the CIO Chief Investment Officer and Managing Partner at Advisors Capital Management, AdvisorsCapital.com to learn what Chuck has to write about. He definitely has something. So wonderful stuff.

[00:37:41] I think the wisdom will actually continue on if you go to his site. So, so thanks again for joining us. And on behalf of Tope and Smith, I am Todd Schoenberger. We hope to see you again for another Buy Hold Cell. Take care.

[00:37:54] Buy Hold Cell brought to you by Cross Check Management. A new story gets shared by a friend on social media or you catch a tweet that really makes your blood boil. But how do you separate fact from fiction? That's the premise behind Disinformation,

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