Tommy Mancuso, President & Co-Founder of the BAD Investment Company, talks about the likelihood of the Fed decision's decision triggering a recession and the war Ukraine is impacting U.S. investors.

Opening Bell

Muted Trading Activity as Investors Await Fed Policy Decision This Week

So for some more insight in early morning trading, I'm joined by Tommy Mancuso, president and co founder of the bad investment company, Tommy Wall Street is expecting a 25 basis point rise during the Fed's meeting this week or following the Fed's meeting this week. Do anticipate kind of the federal mention anything though about, you know, Russia and Ukraine that conflict, its impact on the U. S. Economy and how it could kind of potentially factor into the Fed's future decisions. Absolutely, thank you for having me on the show today. Um, it is going to be a big decision here and I think watching the war, the war in Ukraine and Russia something the Fed is definitely going to monitor. However, I think they need to still remain hawkish in their stance. Obviously they need to pay attention to it, but we are experienced significant inflation in this country and right now lowering arising, raising interest rates will help kind of create a deflationary environment. Now again, they need to proceed with caution. I think there's a lot of uncertainty in the markets right now. We look at the global impact that oil rising oil prices may have. So again, they do need to pay attention to, you know, the war and all this uncertainty Covid cases, we see just saw another spike in china and they locked down one of their major cities. So again, yes, they do need to pay attention to all these headlines and things going on in the world. But again, they need to keep their stance and remain hawkish in the sense that we do have a bigger underlying issue and that's inflation at the end of the day You mentioned oil. So let's go there. The energy market that has been up almost 12% in the last four weeks. There is optimism among kind of us oil majors like Exxon and Chevron that produced or that will produce more to make up for the loss of Russian output. What is your outlook on the oil and gas industry in the near term and then perhaps even in the longer term? Yeah, I think right now we do need to look at some other means and ways to get in production and increasing those levels. We need to pay attention to it. We need to look at some maybe alternative solutions for the short term. So we can, so we don't feel so the economy doesn't feel as bad as the pain at the pump, that they are experienced right now. Having these prices inflate like they are right now will damage us in the long term. Now, if we can look at some alternative means, as I mentioned, that may be able to smooth out this transition while we work through some of this conflict and whatnot. So looking at, you know, some of the global impact of oil, let's talk to the Saudi Arabia's let's look at some of these other, you know, alternative means of getting oil production back back up that way. We're more independent here in the United States. So we're not as globally impacted from you know some of these conflicts that we're experiencing geopolitical tensions again. So I think we just kind of want to look at the long term picture what is going to get us in a better better position long term and what do we need to do, ensure that? So it may be some type of you know political, we may have to you know look at look at Washington and see what can we do and what can we set ourselves up for long term independence in the oil and energy markets. Long term we have seen kind of that pressure trying to be applied to Washington to take some action here to do to your point just that um obviously inflation is the other big pressure that's just been waiting on the market's really for the better part of the last year. Getting to the point now where we're seeing you know, record levels of of inflation from food prices to gas prices as we were just talking a moment ago. You know cos obviously passing these costs onto consumers and being able to do it without much of a bunch from the consumer again for the better part of the last year. Um What is your outlook though on consumer spending this next quarter? Because at some point the consumer has to say enough and the old Adage is higher prices are the fixed to higher prices and that at some point it gets consumers to pull back and then companies realize they've also got to pull back and kind of either get more efficient or kind of refigure their their pricing strategy. Absolutely. I do think as consumers, we are going to look at what we're spending on with a little bit more caution at the end of the day, right. We haven't seen uh, you know, these companies or anything past this down onto the consumers yet, but we imagine that will eventually happen if these inflation prices keep heading the direction that they are at now. Hopefully rising, raising interest rates and hopefully we get some more insight in the upcoming Fed meeting about what that looks like in the long term six months from now. And you know what the process is going to be raising those interest rates. But as consumers, yes, this will impact us. Um as we see these prices slowly increase, it's not sustainable to have inflation rising at 7%. So again, hopefully we see that this plateau and hopefully we're in this Peking phase right now and we can get a little bit checks and balances that these inflation numbers come down that way. You know, as consumers may be tightened their spending a little bit then when, when we look 68 months from now, we maybe have a little bit of leveling off the consumer has adjusted. We get back into normal spending habits. But right now again, we just need to make sure these numbers are going to remain in check, what can we do? Let's just make sure we're making smart decisions. The Fed is gonna help provide us that direction and see where we go from here really. Again, I think as consumers, let's tighten our spending a little bit. But again, we also have a great narrative right now. The reopening people are back to work unemployment numbers that are record lows, especially since the pandemic. So again, people are earning more money, you know, prices, wages have gone up, maybe not keeping up with inflation necessary, but America is back right now and I think this reopening narrative, you're gonna see consumers still spending, let's just hope there's not too much impact when we look at inflation and hopefully these levels peak off in the short term and near term. Yeah, certainly from a consumer perspective, you hope we were hitting the peak really soon, if not already, you know, While the consumer hasn't necessarily pulled back just quite yet, you know, speaking of Pullbacks, the NASDAQ that is down with 7.1% just in the last four weeks, 18.2% a year to date. And at one point and last week it wasn't bear market territory within the kind of greater text space. You have to imagine that there are still bargains there, that the pullback has been maybe a little bit too broad? What kind of spaces within the tech sector do you do you think? Um couldn't best manage its downward trend and certainly maybe an opportunity? Yeah, I definitely think in your, your mega cap and large caps in the, in the tech industry, that's where you're gonna probably see the most value. Keep in mind, I don't think the worst is maybe behind us by any means right now, we are entering a rising interest rate environment and in tech has typically been associated with growth. And growth can be hurt when we're in this type of environment. Now, keep in mind when we look at some of these big mega cap text like your amazons apples, some of those where, you know, there's consumer spending and whatnot. Those are probably good bargains right now, right. If you weren't in those or had exposure to those a month or two ago, well, some of those are down 10% from their highs, it may be a good opportunity to look at some value in some sense, in some of those, but some of those more speculative tech stocks, that's not something we're probably gonna want to stay away from something that maybe it doesn't have strong cash flow or anything right now where they're more focused on their growth and not so much where there, where they're spent or not focused, they're focused on their growth and not so much getting their consumer products out there right now. So some of maybe the energy space and whatnot are clean energy space, those are gonna be a little bit more difficult companies that won't rebound as fast, but I think some of those household names, the mega caps in the tech space are definitely gonna be where you want to, you know, look for some value because those will obviously be the first ones that recover when we do see a turnaround in the market here. You mentioned big tech and I think Apple and then when I think Apple, I think kind of the latest headline out today, the situation in china where they're dealing with, you know, Covid kind of break out and then now following that with some lockdowns and lockdowns that could affect a Foxconn, obviously a supplier, you know, for the iphone and for Apple, um, any kind of lockdown like that just makes me think of, could we get to a place where we're seeing, you know, Covid once again significantly impacting, um, you know, supply chains and certainly chip manufacturing, at least in the, in the near term and the ripple effects of that. Absolutely. Um, when we look at the global impact that Covid has had right to china has this zero tolerance where they go into these lockdowns. Um, Covid, however, is something we're gonna have to learn to deal with and it's not gonna, it's not gonna be something that ends this year or next year, I foresee it being a long term type of effect on our economy and I think we're just gonna have to learn how to deal with that. Um so when we look at some of these tighter lockdowns across seas, I think when we look at companies like Apple, they may have to start looking at some alternative solutions so there is less disruption in their supply chains, Maybe that's maybe moving or building a plant here in the United States. Again, they just got to maybe look at some different alternative solutions, so there's less impact. However, I do think after this latest surge in a Macron, we may be getting closer to herd immunity, especially in the United States, but overseas we've seen that Macron has moved over there at a later pace in slower pace. So again, if we get a little bit more herd immunity on that side, we could see the supply chains opening up a little bit more in the future and in the long term as we learned to deal with uh with covid. Um as as I mentioned, it's here to last and it's just something we're gonna have to handle. Yes. To your point of the vaccination rates here in the US versus other countries are different. And so the handling of things are a little bit different until they get a similar vaccination rates, Tommy really appreciate your insight, Tommy, Mancuso President and co founder of the bad investments