You're listening to taking Stock and Pim Fox on Bloomberg Radio. The muddiness of the data, Well, that's according to Chuck Lieberman, chief investment officer managing Partner Advisors Capital Management with one point three billion dollars of assets under management, joining us from Ridgewood, New Jersey. Chuck Lieberman, you describe the muddiness of data making it difficult for some market participants to anticipate monetary policy. Are you one of those people? Uh? No, Uh.
We see the data as basically fundamentally solid. Uh. There are some numbers that are literally impossible to believe. For example, we've seen productivity go negative. That suggests that the business people are becoming stupider each year. I'm not inclined to believe that, certainly not take that at face value. And that's also related to GDP. GDP has been really week the last three quarters in a row. That's inconsistent with
the employment data, which shows much more growth. UM. I still believe that it is relatively easy to count noses, and so I have a lot more confidence in the employment data. Uh. GDP, on the other hand, is much more difficult to evaluate, and so I suspect we're understating GDP, probably by a considerable margin. So then you must be thinking, Chuck Lieberman, that business investment spending has been much stronger than the very negative readings we've had the last few quarters.
And some people say there's too much uncertainty. Businesses don't want to commit to long term projects and so they're just playing it close to the vest. They're buying backstocks, taking advantage of cheap money and more. Well, I prefer to dig into the data, Kathleen, as you know, and when you dig, what you see is that all of the top line weakness is really coming from the energy and the mining segment, which we know or a week, Uh,
those sectors have retired. Retail sales also started break in, Chuck, But I mean, you know, aren't retail sales also challenged? No, retails. Retail sales at least, consumer spending is probably the single strongest part of the economy. Uh. Fat business is doing well. Uh. The mix is changing. We're seeing dramatic gains by the internet based retailers, and it's just tough for the retailers
with stores uh to really do well. Uh, And so some of them are going to have to retrench there's going to be a complete change in the way in which goods are distributed in this country. UH companies like Uber are getting involved in distributing UH products for FOR companies. So you have to look at what is what what
is really going on. You have to add up the numbers consumer spending, solid, capital spending very weak for drilling for oil and by the way, oil drilling rigs have increased for something like nine weeks in a row, so we've probably bottomed there. But everything else, excluding UH energy
and excluding mining, that capital investment doesn't look bad at all. Okay, so we did have the Institute for Supply Management's manufacturing and their non manufacturing or services indexes decelerating a good bid and of course that's more of a survey based number, maybe not quite the hard number you'd want to hang your your FED hat on, but more fundamentally, as Leo Brainerd, FED governor pointed out dan her speech in Chicago, and she doesn't see an inflation threat and a lot of
people don't, Chuck, is it possible that it's fine for the Fed to take it long, take us time to high rates and the stock market can do fine because you've you've got all the positive fundamentals, but if there's not a lot of inflation welling up, why should the FED be in a hurry to shift. Well, that's precisely lele Brander's position, and she would like to take longer like the FED to keep rates down for a while.
But as you heard from both stand Fisher and from Janet Yelling, and from uh Lockhart and from uh rosen Grin, and there a couple more. Besides, all of these feder fish us have talked about the economy doing a bit better. And my sense of it is if they're trying to send the message that the FED is now a lot closer to hiking rates, that's a message that the market does not want to hear. When Eric rosen Grin spoke on Friday and suggested that we were closer to a
rate hike, the market sold off pretty sharply. Today, Lyle Branner suggested that she would like the FED to give on hold, and in fact the market is up to fifty. So I think we're getting that message where we're getting mixed messages, uh, and the market is is telling you what the market would prefer. The market would certainly prefer for the FED to leave rates unchanged. I don't think
that's terribly realistic. Uh. And when I speak to clients and to investment professionals, you know, probably out of a hundred think that rates ultimately are gonna rise. And the real issue is timing and how quickly and that sort of stuff, not whether they are going to rise. Chuck Lieberman, when you speak to alliance and potential clients that they ask you for one really amazing investment idea, what do
you tell them? Well, one sector we like are the financials, the banks in particular, because they will benefit when rates go up. Uh. Their profit margins have been compressed. Uh. City Group is trading at a severe discount to book value, but its profitability will improve very sharply if rates increase. We think that that's a great example of a company that will do well. One more in another sector, in another sector. Um, Blackstone Mortgage is another one we like.
So here's a company that makes commercial mortgages, not residential mortgages. Uh. They lend to businesses that provide real estate as collateral and there are also positioned to benefit from rising interest rates. Alright, Chuck le Roman, thank you so very much, Chief investment officer at Advisor's Capital Management. He started his career the New York Fed. Is a FED economist, so we definitely want to listen to whatever Chuck says about the FED
and where it's heading next. I'm Kathleen Hayes along with Pim Fox, and this is Bloomberg