BCA's Gertken: 'Recession is coming,' investors should de-risk now

Jeff Timlin, head of municipal strategies at Sage Advisory Services, says that potential problems surfacing in the California and New York municipal bond markets  are telegraphing "an economic slowdown nationally," but that investors should not worry about a significant increase in defaults, and should instead find munis becoming increasingly attractive once the Federal Reserve starts cutting rates. David Trainer, president of New  Constructs, puts electric-vehicle maker Nio back into The Danger Zone, noting that while the stock's price has cratered, it can't even justify its current price in the range of five bucks per share. Divya Sangameshwar discusses a ValuePenguin.com study showing that the average American household will spend roughly $1,730 this year on their pets. Plus, Nancy Tengler, chief investment officer at Laffer Tengler Investments, discusses growth at a reasonable prices in the Money Life Market Call.

D.R. Barton Jr., Director of Market Research at the Foundation for the Study of Cycles,  says the longest cycles suggest that the market is topping out now, but 'near-term overbought doesn't bother me right now.' He is expecting more upside into the election and carrying into 2025 before any downturn is more dramatic than a simple buying opportunity. He says that he doesn't expect much downside risk until or unless the Standard & Poor's 500 falls below the 5,300 level; meanwhile the market is telling him that money keeps flowing in and can sustain the rally longer. John Cole Scott, president of Closed-End Fund Advisors, returns from a recent industry conference that was focused on business-development companies and he gives his takeaways from the event, including how BDCs compare to private credits, how the market is changing and how some money managers are using artificial intelligence to get better information on the market trends that should help them pick better investments or to have better timing on the trades they make and more. Plus, Julie Guntrip, head of financial wellness at Jenius Bank, explores 'The Mind-Money Connection,' a study that looks at how managing money can make you happier or more stressed out. In the Market Call, Lance Cannon, portfolio manager at Hood River Capital Management, returns to discuss growth-centered small-cap investing.

Matt Gertken, chief strategist for global and U.S. political strategy at BCA Research, says investors should be factoring in geopolitics and the upcoming U.S. election now, because current uncertainty could cause a downturn "soon, at any time." But once the election is sorted out, whoever wins — and no matter the policies they pursue — is facing the inevitabilities of the economic cycle. Gertken is clear that he doesn't see the kind of economic imbalances that would cause a market cataclysm akin to the Great Financial Crisis of 2008, but troubles in China over politics there — plus deflation and a troubled housing market — could drag the U.S. and other international economies into a bigger tailspin. Todd Rosenbluth, head of research at VettaFi, looks to the infrastructure space with his ETF of the Week, and Indrani De, global head of investment research for FTSE Russell discusses the upcoming Russell Reconstitution — the exercise of changing benchmark indexes to avoid surprises — and what the current effort (which becomes final on Friday) reveals about the stock market and the breadth of growth now.

Emily Roland, co-chief investment strategist at John Hancock Investment Management thinks the current protracted economic cycle "will end the same way that almost every cycle has," with high interest rates triggering trouble before rate cuts and a downturn that resets the market and repositions it for growth. Roland is hopeful the economy can avoid a hard landing — and she notes that heightened government spending that has helped the current economy could keep it going longer — but says she is watching for when initial jobless claims start to rise, because that will be the signal to get defensive, and while she says it could happen soon, it could extend as far out as 2026. Justin Conway, vice president of investment partnerships at Calvert Impact talks about Community Investment Notes — and specifically the new Cut Carbon Notes — as a way of diversifying income while supporting underserved communities. Cassandra Happe discusses WalletHub's 2024 Credit Card Rewards Survey, which showed that more than 60 percent of Americans think that card bonuses encourage overspending, but where nearly 4 in 5 respondents said that higher inflation has made them more interested in earning credit-card rewards. Plus, Chuck answers a listener's question about the impact and benefits of diversifying into a fund that owns popular stocks when you already hold those companies through index funds.

Scott Ladner, chief investment officer at Horizon Investments, expects the market to start a new leg up and rally, but he notes that it has to go through a shake up and get to where rate cuts start before that uptick starts in earnest. Ladner notes he is "a whole lot more confident about the next six months than the next six weeks," noting that current conditions — with steady or falling interest rates and growth in earnings — "doesn't translate into bad markets." While those conditions don't always portend bull markets, those conditions do tend to drive markets higher. Jeffrey DeMaso, editor at The Independent Vanguard Adviser, discusses Vanguard PRIMECAP and PRIMECAP Core, two classic growth funds that were closed to new investors for 20 and 15 years respectively; Vanguard just re-opened the funds and DeMaso discusses who they are right for. Greg McBride of BankRate.com discusses the site's latest Emergency Savings Report, which showed that nearly 60 percent of Americans are uncomfortable with their level of emergency savings. Plus, in the Market Call, Wayne Thorp, head of research and analysis products at AAII talks about buying growth stocks now.

Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute, says the market will take a break of as much as 10 percent, and he is looking for that kind of setback before getting back to being fully invested. That said, he expects the economy to pivot out of slowdown mode and "into a more sustainable growth path, but probably not until later this year or early in 2025." David Trainer, founder/president of New Constructs, puts a popular consumer name into the Danger Zone, Jeff Lambert of Tiicker — a service that helps companies reward investors for participating in proxy votes — discusses the firm's recent survey which shows that more than three-quarters of investors might pay attention to and actually vote their proxies if there was a tangible benefit to getting it done. Plus, in the Market Call, Ed Shill, managing director at the Wealth Enhancement Group talks about how investors should go looking for individual stocks at times like now when the market is "overbought," and among his surprising picks for these times is troubled airplane maker Boeing, which he describes as an enormous bargain as it tries to regain lift after recent operational troubles.

Larry Adam, chief investment officer at Raymond James, says that summers tend to be more volatile and while the market has been up seven of the last eight summers, those gains have had to overcome significant drawdowns, and he thinks that pattern will repeat with an "overbought" market now. Adam still expects two rate cuts, which should avert a recession, although the economy will likely struggle and will be setting up a rougher year in 2025. Roxanna Islam, head of sector and industry research at VettaFi, discusses the benefits and flaws of applying rules-based investing to closed-end funds, noting that changes in the industry have forced changes on a rules-based index of the closed-end fund space that was created by VettaFi, and how that is impacting the holdings and asset allocation for investors choosing to use fund-of-funds rather than to build their own portfolio of individual closed-end issues. Rachel Perez discusses a study done for Preply.com which showed that financial management is one of the three areas where Americans most wish they could develop more personal discipline, and Vijay Marolia, chief investment officer at Regal Point Capital, brings his "five lens approach to stock research' to the Market Call.

Howard Yaruss, professor at New York University and author of "Understandable Economics,” says the Federal Reserve should "consider a small rate cut, as soon as possible," in part because the central bank has done a good job — as measured by certain inflation measures — in at least coming close to its target levels, but also because other central bankers around the globe have started to cut, and there could be some issues arising if U.S. monetary policy is out of sync with the rest of the world. Yaruss sees the economy mostly avoiding significant recession and downturn until at least 2025. Todd Rosenbluth, head of research at VettaFi, goes out the risk scale by picking a fund that targets junkier junk bonds as his "ETF of the Week," Cassandra Happe talks about the latest survey from WalletHub which showed that commuters and long drivers are more upset with inflation than consumers with large families and bigger grocery bills, who are more focused on rising food prices, plus Rob Spivey, director of research at Valens Research, talks stocks in the Market Call.

Dedicated value investor John Buckingham, editor of The Prudent Speculator and principal portfolio manager at Kovitz Investment Group, says that the long run of the Magnificent Seven has not made it impossible for value investors to hold some of them, noting that while the very hottest don't meet the definition of value, other tech giants like Alphabet and Meta Platforms are trading at levels that shouldn't scare the bargain hunters away. He discusses his buying and trimming strategy in the Market Call. Ebony Reed and Louise Story, co-authors of "Fifteen Cents on the Dollar: How Americans Made the Black-White Wealth Gap" discuss how Americans view wealth — and often confuse it for income — and how that it will take well over a century, barring legislative progress, to make any significant progress that levels the wealth field for all Americans. Plus, Rob Williams, managing director of financial planning at Charles Schwab discusses the firm's eighth annual Modern Wealth Survey, which showed that More than 60% of Americans feel they are in a better position to achieve their financial goals than the generations that came before them.

When Chuck turned 62 last week, he became eligible to claim Social Security benefits, and while he always expected to wait as long as possible before collecting, his own health history, his recent marriage and the passing of some friends of similar ages prompted him to revisit the entire Social Security claiming decision, because deciding when to claim benefits — and how much to let them grow or how to handle them if you take them early — may be the single most important financial decision most Americans ever make, with their financial well-being for the rest of their lives at stake. Nathaniel Popper, author of "The Trolls of Wall Street: How the Outcasts and Insurgents Are Hacking The Markets," discusses his new book and how the traders of meme stocks and the denizens of message boards have gotten better and smarter and have been learning from their mistakes in ways that older generations never really did, and how investing is a different game to the many young people who are getting into it earlier than ever before. Plus, David Trainer, founder and president at New Constructs flips things around this week, and puts a brand-name investment bank into the "Attractive Zone," noting that while many companies overstate earnings, this one has gone the other way, making it a bargain now.