let's turn back to the major indexes. Mixed day
on Wall Street after some selling pressure yesterday, certainly
in the stock market joining me now is nancy tangle
er Chief investment Officer at laugh furtwangler investments nancy always
good to see you. What is your reaction to
the stock market right now? Oh kristen it's day
by day. I think you have to kind of
treat it a little bit like white noise. You
know, we get the algorithms, reading the headlines
in the morning and we get sell off as a
result or or a big rally as short covering comes
in. But I think we're starting to see in
the economic numbers that some of what the Fed is
doing is actually having an effect or maybe I should
say some of what the bond market has done because
I think they've done the heavy lifting for the Fed
is starting to have an effect on the economy And
that could actually be the bad news is good news
for stocks as we, as we move through the
summer, interesting as. So the last time we
spoke nancy was about a month ago, I was
in the depths of the market selloff in May,
if I remember correctly. And you were saying that
some of your clients were actually interested in putting money
to work Amid the recent pullback. And at that
point, of course, the lows that we had
seen after the year of 2022. What's the general
sentiment that your company right now is the chief investment
officer? Are you putting money to work or waiting
on the sidelines? No, no. We're we're
folding it in. I think it's it's time for
investors to look at their portfolios and say I want
to add, I should probably be adding in some
risk here. So that when we come out the
other side they'll participate. So we've we've added some
names in, in technology. We've added some growth
thier names. I mean, for example, in
our in our growth strategy we've we've added lulu lemon
but we also added Spotify, which we actually think
is somewhat defensive. And then we added in our
in our value strategy, we added to a position
in oracle and added to holdings and chub and and
Abbvie and and still have a pretty strong commitment to
, to technology in that portfolio as well. So
I think you want to be deliberate, uh,
you don't want to be continuing to think this is
the bottom. You just want to do what you
do with your 401k. You add some, you
wait, you add some more and you buy great
companies that I think will be a generational buying opportunity
when we look back on this period, interesting.
So doesn't matter nancy. If we head into a
recession, I mean for the major indexes, certainly
some expect we could pull back further from here.
As you mentioned. I can't guarantee that the bottom
has actually been set. But there are other bullish
calls that the S and P will set a new
record high before the end of the year by jpmorgan
for instance. How much does a recession matter to
this stock market? Well Kristen it depends on how
deep it is. I mean we knew that the
economy was slowing coming into 2022 just based on the
base effects from 2021. So we have been positioning
our portfolio to add in reliable earnings growers and companies
that are raising their dividends and and that's that's been
a good decision. But I think if we get
a deep recession then then all bets are off the
market will sell off further. I don't think we're
in recession. I know there's a lot of people
that think we are maybe it's just a technicality.
We are certainly slowing and um but I think if
you look at all the historical benchmarks, so yield
curve inversion, leading economic indicators, credit spreads widening
, we just aren't there yet. I mean the
economy coming into this was much stronger than previous periods
when we've had very high inflation. And so I
think that that helps and the consumer is working and
that's also good news. Even if if their,
you know their paychecks are getting eaten away by inflation
, you're right, you're right and the jobs market
very strong. Obviously the Fed chair reiterating that in
Portugal at the E. C. B. Forum
earlier today as well. So nancy, you mentioned
some companies that you've been adding positions in Spotify,
lululemon Abbvie chub oracle as well. What's the time
horizon here? I mean for people who are looking
to get back into the market, Certainly if you
have a retirement focus, um, and you want
to add to your 401K over decades, it could
be a good time. But do you plan on
holding these companies for years or these short term investments
? No, we're long term investments, investors kristen
and I would argue that every investor should be a
long term investor because we don't know what kind of
exogenous shocks we're gonna have or, or when we're
gonna have policy policy mistakes out of Washington. Like
we've seen this this last year. And so I
think you, you want to be looking out 3
to 5 years and and seven if possible and,
and then you can have the courage to step in
and and just incrementally add to positions. I'm not
, you know, I'm not saying this is the
time to buy stacks, but I am saying it's
the time to buy companies that have been beaten up
, but that have strong balance sheets and pricing power
and not the non earners, which is what we
saw sort of, you know, in the previous
heydays, you want great companies that have the wherewithal
to withstand a slowdown. Well, another question that
I have is these risks and shock factors as you
mentioned nancy of course china, zero tolerance. Policy
, impacting global supply chain Russia's ongoing invasion of Ukraine
obviously impacting the supply chain, especially prices at the
pump as well. How you factor those into your
thesis? I mean, how long could those remain
risks? It seems in some cases like it is
unknown. Well and and definitely the market has has
factored that in. You're absolutely right. I think
the market is discounting the worst case scenario. And
so I'm not arguing that we're gonna bounce off the
lows here. I think we're gonna have a choppy
summer as this all kind of comes out. I
mean, we know that the P. M.
I. Is the uh purchasing manager indices have rolled
over globally and domestically that the manufacturing P. M
. I. Has a pretty high correlation with corporate
earnings and we've not seen earnings revisions come down.
So I think that's gonna be the theme of of
the second quarter earnings calls, maybe some forward guidance
coming down, but I actually think some of that's
priced in because a lot of the cloud names for
example, you know, they generated 30 to 40%
revenue growth. They had a rally the next day
and then they sold off further. So I think
the markets expecting ongoing supply chain risks of that improves
and we we did here today from the head of
the L. A. Airport that that things are
starting to pull through the system faster. We're seeing
inventory inventory is built not just at retailers, but
I mean uh and in the wholesaling side of things
. So I think that could be a pause,
a net positive china sending reopening could also be a
net positive but make no mistake. The market is
going to be focused on inflation and earnings and um
inflation as it relates to when the Fed is going
to stop raising, right. So it does seem
as if the global supply chain pressure is easing a
little bit nancy, that it's definitely a good thing
. But what about the risk of another covid variant
popping up? I mean, I think a lot
of people were caught flat footed when oh, Macron
picked up literally the day after thanksgiving last year.
Is that something that you have your eye on?
You know, I mean, I may be wrong
on this one, but I think that most countries
ex china are learning to live with the variant of
Covid and variants. Uh, so I don't think
that's really unless we go into economic shutdown and I
don't think americans have an appetite for that and I
really don't think the rest of the world does.
So I'm more focused on, you know, what
drives stocks over the long term and term. And
then at the end of the day it's earnings wars
matter, of course I've managed through a couple of
major incursions and they matter until they don't and when
the economy starts picking back up unfortunately. Or fortunately
for investors, I guess people start to turn their
attention to the fundamentals that that drive stock prices.
But you know, this this could get a lot
worse before it gets better in Ukraine. And the
one thing I think we're starting to see is United
NATO, United, european Allies, the G seven
meeting, etcetera. So hopefully, you know,
we'll see some progress there. But I think the
other factors are going to matter more to the markets
. All right, nancy, tangle, er,
Chief investment Officer at Lafferty angler investments and nancy,
Always good to get your take. Thank you.