Full Video Transcript Below:
CAROLINE WOODS: Joining me now, Steven Orr, founder and CEO of Quasar Markets. Steven, great to have you on.
STEVEN ORR: Thanks for having me.
CAROLINE WOODS: Let’s start with the news flow today. Steven, Nvidia betting on Intel taking that $5 billion stake, entering this collaboration with the chip maker. What are your thoughts on that?
STEVEN ORR: Yeah I think obviously it’s going to make the president very happy. I mean, we have now got 10% invested now as a country into Intel, and I think it fits the narrative of bringing everything back home. And when you look at Intel itself, it has been a great chip maker over many, many decades. And it’s faltered a little bit here. So I like the fact that Nvidia is making a home play here and bringing everything back home. I love this play. This is great. And you know, as rates come down that’s making money cheap making chips here. I think this is a great play and I think it’s going to play out in the stock too. I think you see it now. Yeah, jumping 30% But Intel could make an even bigger play here as we start to see. And I remember the days with Intel inside, right where you couldn’t even buy a computer without Intel in it. And I think this makes a big move when you’re looking at the next level of technology.
CAROLINE WOODS: And Nvidia saying, look, I trust Intel, so I like this play Intel, as you said, a big on this news. And Intel is actually up more than 50% year to date, very close to those 52 week highs. Would you be a buyer at these levels, Stephen.
STEVEN ORR: Ouch that’s a very hard question because quite frankly, you’re right. It’s up 50% I think some of that euphoria is now in it. I think some of the repricing of it look, it’s, when you look at the market cap of, of NVIDIA and look at the market cap of Intel, there’s a big discrepancy, right. And Intel $5 billion is really not a lot of money when you’re looking at a $4 trillion company right. So right now no I’m not I don’t think the valuation is a little rich for my blood right now.
CAROLINE WOODS: OK, but you’re upbeat overall on the upbeat on Intel. Not so upbeat on the economy though. The Fed of course cut interest rates. Yesterday I was taking a look at your notes and you seem pretty downbeat. You said, cutting rates doesn’t solve the structural cracks in the economy. What are those cracks, steven?
STEVEN ORR: Yeah you know, Caroline, when? About six months ago, I was calling for these cuts. I mean, I thought that the Fed was so far behind the curve, and it got worse and worse and worse. And I was like, I don’t understand why we’re not cutting these cracks were coming. Was talking about job losses coming in. And now we know that the numbers were wrong. So all of a sudden now another, you know, another crack in the economy. And when you saw the one thing that out of that Fed meeting that really I went, Oh my was the risk management cut. When Powell called it a risk management cut, I had to understand what that actually meant. Is he meaning there’s more coming down the pipe. Does that mean that well, we’re doing this to protect ourselves against these problems. And when you look at the other cracks in the economy, when you see people losing jobs, well, in the past, there’s been other jobs for them to go to. Now we’re not seeing that anymore. There’s not as many jobs we’re seeing. I also taking some of those jobs. We’re also seeing cracks in the economy with inflation. And we’re looking at something we have not seen. And I’ve been talking about it for over three months now. Is stagflation where inflation is still up, jobs are losses. That’s a very bad place to be. We’ve not seen that in a very long time, if not ever in the economy. And right now this is not a good place to be. But yet we are now seeing times where, where we could find some good stocks out there with, with this great positioning. But right now, I’m not seeing that the economy is not as good as this hopium that we’re seeing right now in the markets, markets making all time highs and people are losing their jobs. It doesn’t make any sense to me.
CAROLINE WOODS: OK so you’re flagging stagflation. There are, of course, economic implications to that. But I want to know about the market implications to that because Wall Street is hitting all time highs. The stock market is, while Main Street is feeling the squeeze. So how long can this disconnect last before reality catches up. And what does this mean for the market’s direction?
STEVEN ORR: Yeah I mean, the market can stay high like this for a long time. I mean, look, 1929 you can say 87. You can say.com 2008. And then all of a sudden things fall apart. COVID at the time. And then things fall apart. Right so it doesn’t I mean, you can’t always have my crystal ball working all the time. Exactly when. But I can tell you that I feel like it’s the show the price is right where the Mountaineer is climbing the Hill, the mountain. And all of a sudden it gets to the top and then it falls over because people can’t figure out where the price is. I don’t want to be the person waiting to the very end. I want to be out of the markets long before the prices start to fall. We are seeing institutional selling now as they are profit taking. Quad witching is tomorrow and I think the next level of all of this, I think you’re going to start to see as going into some of the worst months, which were already into September, but October, this is a normal month for down right, so I don’t like those combinations. It’s a little too scary for me. Halloween’s coming up. I don’t want to be in the markets as heavy as I am now. Am I selling everything that I own. Absolutely not. I never do that. But I am scaling out, and I think that’s important to understand that this is not a market crash, but it is a market pullback. And we need healthy market pullbacks in order to go forward. But this might be a little bit bigger than just a 5% or 10% And we’re not seeing that pullback of course play out today, at least not right now. But when we do see it how much of a pullback are we talking.
STEVEN ORR: Yeah and I’ll be back on his show talking about it I mean, let’s be honest about it. You know the actual number a good healthy pullback would be about 10% I’m expecting somewhere between 15 and 17% pullback. That would get back to the Fibonacci numbers. If you’re a technical trader I also think some of these numbers are a little over the skis here. When you’re looking at the queues versus the SPI, you’re also looking at margin debt at these banks at all time highs. There’s a lot of factors here that are saying, OK, if the banks were to pull back that margin debt from some of these traders, that would also give you about another 3% or 4% So that’s why I’m saying it’s not 10% It’s probably somewhere around 15% to 17%.
CAROLINE WOODS: Steven, tell me, what are you selling right now. What are you taking profits on. And what are you buying. And what you call a stagflationary environment.
STEVEN ORR: Yeah very simple. I’m not selling my Apple because, quite frankly, Apple is still selling iPhones. Try to find the AirPod. You’re now going into November, but I am selling stocks that I think and I’ve been saying is tech, tech, tech and biotech like Palantir back in 35. I was happy to buy it, but it goes all the way up to 175. That’s a little over its skis right here. What am I buying. I am buying stocks that are still producing cash. I’m going to go back to the old Warren Buffett thought process, find companies that are undervalued, that are still kicking out cash and get that double whammy. Things like John Deere and Caterpillar, those stocks have been beaten up and it’s starting to fit the narrative of lower interest rates. So I do like those kind of stocks. I also like stocks that are not quite frankly, in that inflationary area. And one of those that we’ve been talking about for a little while has been in the chip sector. And that was Intel. But now Intel’s up. So look, I’m not selling it but I’m not buying it here either.
CAROLINE WOODS: All right. We’ll leave it there Steven. I appreciate your picks and your insights. Thanks so much.
STEVEN ORR: Thanks, Caroline.
