AriseTV Xchange (Dec. 15, 2014)

AriseTV interviews Michael W. Conway of the Conway Wealth Group on oil prices and the Fed’s policy shift.


Speaker 1: … signal that builders are generally pretty optimistic about sales trends. Well on Wednesday the US Federal Reserve will release its monthly notes, which tend to be rather coy, but a key part to look for is whether it changes it’d outlook on interest rates. Michael Conway, CEO of Conway Wealth Group at Summit Financial joins us now. Michael, welcome to Arise Xchange and thank you.

Michael Conway: Thank you for having me.

Speaker 1: You know we talked just a whole bunch about oil for a moment, so let me start with that. Why now will the price of oil dropping all of a sudden rattle the markets the way they have been?

Michael Conway: Well think about it. So many businesses and economies really rely on the price of oil. You mentioned earlier the price of oil is now just about its five year low, and we think back to what happened in 2008. Oil had risen up to 120, actually over 130 a barrel, I believe, and then dropped all the way down to about $38 a barrel. So the numbers you were talking about a moment ago are significant, where we are here close to the mid-50 range.

Speaker 1: But won’t this possibly help top-line earnings for companies as consumers maybe spend more money?

Michael Conway: I think that’s the good news. That’s the good news part of the story, right? So as the middle class in particular has more money in their wallet here over the holiday season and going into next year, that is the good part of the story.

Speaker 1: And the other good news is that it’s not necessarily all about the global economy, isn’t it? That the US is producing so much of its own oil now. That’s what we keep hearing at least. That that has helped drive down prices and that’s what’s keeping prices low when OPEC in the past maybe had some room to cut capacity. Any truth to that?

Michael Conway: I think there is truth to that, and then we see so … The fight of the bigwigs here now between what OPEC is doing and what we’re doing here with our domestic production. Who’s gonna blink? What will end up happening and will the US gain a considerable foothold, which I believe it will. So that’s an interesting piece to this.

Speaker 1: It’s kind of entertaining, right? We have a-

Michael Conway: It’s a slug-fest. We’re gonna see what happens here.

Speaker 1: We have a horse in the race now. Alright so the Fed is going to meet and we always try to decipher exactly what these notes are when Janet Yellin and the group come out. What do you think they’re gonna say on Wednesday, and is it gonna look different than what they said last time?

Michael Conway: So what’s the term you used before?

Speaker 1: Coy.

Michael Conway: Well, we’re gonna-

Speaker 1: Sometimes I use “dense,” mix it up.

Michael Conway: Well I think they’re gonna come out with probably considerable time.

Speaker 1: Alright.

Michael Conway: So they want to raise rates, and they’re talking about middle of next year. But a lot of it is data-dependent. We don’t see wage pressure. We’re seeing what was happening in the oil markets, domestically things have improved considerably, but the partners we trade with around the globe, being the EU, Japan, China, significant slow down. So how will that affect us here and what will that do enter into the Fed’s decision as-

Speaker 1: And I guess they’re gonna say we really don’t see any signs of inflation, and with oil prices pulling back, if the consumer may be feeling less signs of inflation as well, and that’s a key indicator of what they’re looking for as well, is wage pressure.

Michael Conway: That is right. So this additional move with oil coming down is a big key indicator. So wage pressure we’re not seeing, commodities have fallen dramatically. So we have commodities falling, so the bond market is telling us the market’s are concerned. Commodities falling are showing a slow down globally, and I think these are key things that they’re gonna be looking at.

Speaker 1: Okay, so let’s look at some of the economic data we have out there. For example in the improving job market, what we’re seeing with home builders’ confidence. Overall is the fourth quarter of 2014 shaping up the way you think it would be?

Michael Conway: Yes, well I think again domestically things are looking pretty good, right? So the unemployment numbers have improved, though we have to watch the participation rate, that has not improved-

Speaker 1: The quality of the jobs is still kinda crummy. They’re getting better.

Michael Conway: They are. So that’s an issue. But overall domestically auto sales are good, real estate is vastly improved. So we’ve seen a lot of good signs here, but our trading partners are having trouble. So we’ll see what that does to us going into the beginning of next year. But domestically things are looking up.

Speaker 1: And I don’t want to put you on the spot, but with the change in Washington at all, what does that mean for the markets generally?

Michael Conway: Same thing as it did last year and the year before-

Speaker 1: And the year before-

Michael Conway: And probably next year and the year after. What happens in Washington probably won’t have much of an effect. I think it more comes back to business cycles than it does what our friends in Washington are doing.

Speaker 1: And we’re seeing a better business cycle right now.

Michael Conway: Here, domestically, we clearly are seeing a vastly improved number, so that’s a good thing.

Speaker 1: Michael Conway, founder of CEO Conway Wealth Group,, thank you so much for coming in. Appreciate it.

Michael Conway: Thanks for having me, appreciate it.

Speaker 1: Coming up: year two of enrollment for the Affordable Care Act. We’ll have a look at where Obamacare stands. You’re watching Arise Xchange. Stay with us.