Why Investors Should Stay Calm During Market Volatility

Let's get to the big story.

Breakdown.

Wall Street is facing a dual shock as surging crude oil as well as reignited anxiety are triggering a brutal sell-off in yesterday's session.

Now we saw Brent crude pulling back on this morning after surpassing 100 yesterday.

Also yesterday we saw escalating tensions with Iran driving Treasury yields to new 2026 highs and raising Fed interest rate hike prospects at the same time big tax AIre is facing a moment of.

Reckoning and yesterday Alba's Tesla led a $767 billion pullback in terms of mag 7 evaluations.

Well joining me ahead of the weekend is Gary Shields, who is chairman of NASsau Street Partners.

Gary, good morning.

Thank you so much for joining us.

Good morning.

Thank you for having me.

Well, here we are after yesterday's selloff.

We are looking at bond yields as well as crude oil pulling back from yesterday's highs.

But what do you make of the risks that we see right now?

Well, I, I actually, I think that you know.

We get caught up a lot in watching these daily moves and I tell people, you know, the market, market, uh, can move up and down a little bit, but I, I look, I take a longer term look and, uh, uh, the, you know, the risks that I see are, are really, you know, if inflation gets out of control, which I don't really see uh happening or if we have uh some kind of a global uh uh issue geopolitical issue.

Which I also, you know, I, I go back to the '87 crash.

I went through the dot com bubble.

I've seen just about every recession, every uh trend, and, uh, and the market always recovers and, and, uh, as long as we see technology and innovation growing in the country, I don't really see a major risk.

I mean, it's sort of like, OK, yesterday, you know, the market drops, today it goes up, you know.

Sometimes I tell investors, you know, don't try to chase these moves.

So I guess that's the way that I look at it.

Yes, and Gary, we are looking ahead to the July Federal Reserve meeting and you mentioned the key word here which is inflation.

So the PPI as well as CPI data that we got for the latest month, of course that was lower, but we have to keep in mind that oil prices are rising.

Rising, so it does muddy.

It does cloud the inflation picture.

So when it comes to Kevin Warsh, the new chair of the Federal Reserve, give us your take on what he has to do moving forward.

Well, I think the Fed is the policymakers are sort of in wait and see mode.

I mean they follow the data, right?

And so for me to, I mean, I'm not, you know, I don't know what they're going to do.

But I think that uh they watch closely and uh and right now I think you know they just don't I don't think that the policymakers feel a lot of pressure to to drop rates.

I mean you you have uh you do have consumer spending dropping but you have inflation at this, you know, staying above the target rate and and putting pressure to uh to keep uh to keep rates, you know, up and so uh.

Uh, you know, I, I, I, I think they're just going to follow the data.

Early in the year people were calling for a faster economic growth rate.

Now, now everybody's come to 2%.

I've been not like I was better than anybody else, but I was looking at 2% months ago and I think expectation sometimes exceeds reality, so.

Uh, I, I think again the Fed's just going to follow the data.

They'll probably you know do what they need to do.

By the way, I I watched what's going on in the employment markets as well because that drives that helps drive consumer spending, which drives inflation, which drives, you know, a lot of things.

So yeah, and Gary, you mentioned that you've been through the dot com.

Bubble 1987 as well as what we saw with the great financial crisis here.

So all eyes are on AI infrastructure right now and CPX.

So without immediate ROI return on investment, are you concerned or what inning are we in when it comes to artificial intelligence?

It's interesting because I think last time I was interviewed by your network, I made a comment that AI is everything and So I, I go back to the, uh, you know, I was sitting a couple blocks away during the '87 crash when we didn't have instantaneous communication, that kind of thing.

And what I look at is back then I was with uh LF Rothschild and then Robertson Stevens and there and we had this tsunami that was technology that was driving everything creating this enormous opportunity we you know, then we had dot com bubble and we had the real estate bubble and we, but those were bottle rockets we I think everybody looking at those being realistic.

I think AI has the capability of, of creating a new tsunami.

That will create thousands of companies will will see the, I, I believe we'll see the IPO market uh get very uh active again, M&A active.

So that's what I see, uh, I see AI driving and I could talk about this a lot, but last year in at Nassau Street Partners we helped a lot of private companies raise capital or do M&A.

And so last year you wouldn't leave the word AI out of the deck.

I mean anybody doing AI, everybody's throwing money at it now.

I think people are looking at what's going to help AI work, you know, is it power, battery storage, the industries that will allow that to proliferate, and then ultimately companies will focus on the ROI that they're going to get out of the knowledge that comes from AIs.

Yes, and Gary, you mentioned M&A as well as IPO, so I want to get your. when it comes to corporate capital allocation, what do you expect to see for the rest of 2026 as well as heading into 27?

Well, I would just look at it maybe call it M&A and capital markets combined.

Uh, we see again at Nassau Street Partners we see an improvement in, in the market environment.

We see a lot of interest coming back in, but interestingly we see a lot of alternatives, family offices, PE, and others rather than, for example, the venture community pouring money into this.

A lot of venture capital, uh, firms out there and I founded a venture capital firm, so.

Some of my buddies probably won't like hearing this, but they're sitting on their hands, so I think I think we're going to continue to see improvement and as I say, as this AI wave.

Moves through.

I think it's going to, we've got a great opportunity and we have a great opportunity as a firm to build what is the next Horseman.

I call it, if you've ever studied the four horsemen Robertson Stevens, Hammerer, Chris Montgomery, and Alex Brown who drove that technology wave of funding, we have that opportunity to create another firm like that.

Well, Gary, a lot to keep our eyes on as we head into the second half, so I appreciate your time as well as all of your insights.

Thank you Thank you very much.

Have a great weekend.

Thank you.