AriseTV Xchange (Jan. 8, 2015)

AriseTV interviews Michael W. Conway of the Conway Wealth Group to discuss low interest rates as well as the continued effect oil prices on markets.

Transcript

Speaker 1: Wondering what is going on with the manic markets. Two straight days of triple digit losses, followed by two days of triple digit gains. Some good economic data probably leading the way. Micheal Conway is the CEO of Conway Wealth Group at Summit Financial, and he joins us now. Michael, welcome back to Arise Xchange.Michael Conway: How are you? Nice to see you.Speaker 1: Yeah, nice to see you, and Happy New Year. How do you explain this week for the market? Because, huge swings, lots of volatility.Michael Conway: Lots of volatility. I think that is the key word for going into 2015. We had the last two or three years everything was fairly calm, and we've seen volatility creep back in. I think energy, and oil in particular, played a big role in this. So we're gonna see more volatility come this year.Speaker 1: Who makes money from volatility?Michael Conway: Traders.Speaker 1: Yep, that's right. It's not the long term investors.Michael Conway: It's not the long term investors.Speaker 1: I asked this when the markets went down Monday and Tuesday. I thought that the markets had accepted oil as the new normal right now, pretty quickly. But then it's continued to slide, and it continued to spook the markets.Michael Conway: Yeah. So, it's interesting to watch. We, over the last year, have seen oil go ... actually from last summer ... over $100 a barrel down to, as you see today, $48 or whatever the number is.Speaker 1: 50% drop.Michael Conway: It's fascinating to watch, and it's happened quickly. It's a couple of things: A lot of supply, and demand has slowed down, so we see global slow down. Not as much here. We have seen improvement here domestically, but globally we've seen slow down.Speaker 1: It's a highly manipulated market, isn't it?Michael Conway: Very much.Speaker 1: You have Saudi Arabia, you have OPEC. Saudi Arabia is sort of driving the oil tankers here, aren't they?Michael Conway: They are. I think what Saudi Arabia has said is they're gonna keep production where it is, and that has spooked markets. Markets have continued to fall as a result of that.Speaker 1: We started seeing a really strong rally once again when the Fed came out and crafted yet more language to say more of the same basically. That's the way I read it on Tuesday, or yesterday. It's still a Fed driven market, do you think?Michael Conway: Here's the case: Now the Fed is telling us they're gonna be patient.Speaker 1: Patient, right. That's the new word.Michael Conway: So, we're gonna be patient. What exactly does that mean?Speaker 1: They're also saying that inflation isn't gonna be so important in their thinking.Michael Conway: Okay, that's the new data speak, right? All last year was "We're looking for inflation, we want to get it to 2%." It continues to fall. In fact, we see global deflation, so I think the Fed will pause. I would not be surprised if the Fed actually didn't raise interest rates this year because of what has happened and what we've seen in oil and the deflation issue.Speaker 1: When you continue to have historically low interest rates for as long as you do, like Japan? At some point are you just forever gonna be in that environment?Michael Conway: Bernanke was heard saying, the former chairman of the Fed, he didn't think he'd see rates normalize in his lifetime. That's an interesting statement, that says a lot. When we look at interest rates globally they're very, very low. So, you've got interest rates ... the ten-year yield with The Bank of Japan is somewhere around 30 basis points. Germany's 10-year bond is about 50 basis points, and our 10-year bond is about two. These are very low rates, impossibly falling further.Speaker 1: Okay, so finally if you're in sectors right now, where do you want to be?Michael Conway: Well, I think one of the obvious things that jumps out is energy, right?Speaker 1: Well, the question is, is this a buying opportunity for energy?Michael Conway: For someone investing long term, I would say the answer to that is yes. It could drift lower here, you could see it fall lower. There's the possibility that oil does go up later in the year as well. If its supply slows or goes down, prices could go back up. But for long term we see it-Speaker 1: Like actually. Michael Conway, President and CEO of Conway Wealth Group, thank you so much.Michael Conway: Thanks for having me.Speaker 1: Coming up, it's a monster lawsuit about the headphones you wear. Stick around on Arise Xchange.