Global Bond Selloff Sends Yields to the Highest Level Since 2008

**SPEAKER_1** (0:02)
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**Paul Sweeney** (0:27)
David Katz, CIO of Matrix Asset Advisors. It's really good to speak to you.
The S&P 500 did really well up by 2.6 percent in August. September is usually a much more difficult month. What's your view, especially as oil markets and the continued rise in oil prices challenges the view for equity markets in the US? Can we still see a strong September?

**David Katz** (0:52)
We've had a great nine months. The market has been on a moonshot.
Yet, there's been a lot of negative news. Oil prices staying up here for a sustained period is problematic. You're seeing yields across the globe and especially in the US moving higher. The markets ignored a lot of that. We think we probably have entered a trading range with maybe 5 percent on the upside, 5 to 8 percent on the downside. Ultimately, we think the market goes higher, but expect a lot of volatility in the short term and possibly a pullback if the news flow doesn't start to get better on oil or Iran.

**SPEAKER_4** (1:24)
David, you talk about taking a longer view in terms of investing and not getting caught up in daily price swings. Given that we're in an age of prediction markets, crypto, gambling, betting, how do investors build this muscle of resilience in the market?

**David Katz** (1:40)
You've got to have that mindset. Ninety percent of the people lose in the gambling markets, but people like to do it.
People play crypto, a lot of people, most investors in crypto have lost money if you weren't there early. So, you've just got to change your mindset. Know that the stock market is not there for speculation, but for long-term wealth accumulation. If you have that mindset, you can buy things for the longer term. And if you can buy things for the longer term, there are a lot of really good businesses that are selling at 15, 16 times earnings. Don't get caught up in the craziness of the day.

**Paul Sweeney** (2:09)
Okay. What are you looking to buy for our dips? And yeah, I come from a country that is famous for enjoying a flutter i.e. a bet or a gamble in the UK. What are you thinking about in terms of when you look if there are some stocks that sell off, what sectors are you looking at to pick up now?

**David Katz** (2:29)
So we're up nicely for the year, but the stocks that we're going to recommend today have nearly not done anything for the year. So groups that have really pulled back. Utilities started the year hot. Of late, they've had a very bad August.
So right now, they're pretty much flat for the year. Companies like an AEP or Nextera Energy are going to be long term energy winners because of the AI build out. But of late, they've gone down because of higher interest rates and because there's been some pushback on the data center. So we like an area like that. Consumer discretionary, like a Home Depot or a Lowe's, really good businesses. At some point, the housing market's going to turn around. Right now, you're not paying for any of that upside.

**SPEAKER_4** (3:09)
A lot of companies have had earnings and raised outlooks, earnings beats and raised outlooks of the net with sell-offs. Can you talk to me a little bit about the industries that are particularly susceptible to that action, or even if that's possible to determine?

**David Katz** (3:23)
Well, you can determine it. So semiconductors had their best second quarter ever because the stocks, the business was good, but the stocks went up 100 to 200%.
Right now, they're reporting really good earnings, but people are worried about two years out, three years out. So when you get the 50 to 100 times earnings, you've got too much positives built in, and you can have some sort of a pullback, even if the news is very good. We do think there are certain companies that are part of the AI build-up that have sold off that are now opportunities. A company like Generac, which makes power backups for these companies, had a great run, gave about two-thirds of that run back, sells at about 20 times earnings, 18 times earnings, now has great prospects. So you could step into things like that. We still are wary about some of these semiconductor companies that went up to 100 times earnings and today are back at 50 times earnings. They're still pretty expensive.