Mark Lehmann, CEO at JMP Securities, joined Closing Bell’s Kristen Scholer on set at the NYSE to break down recent trading action, and look at some trends emerging in this volatile stock market.

Stocks Close Higher Thursday After Sharp Selloff 

Well, let's turn back to the major indexes joining me now is Mark Lehman, the ceo of the asset management firm, JMP Securities, A citizens company Mark, thank you for coming on the show. It's good to see you down here on the floor of the stock exchange. Absolutely. So as our viewers see on the screen here, obviously a nice rally on Wall Street, would you call? Well, it's a relief when the market goes up, at least for me. So I'll call that a relief. I mean, it's been five days of pain. Um as a reminder before that we had a pretty big rally into this last week of a tougher market. I think the markets finding when it does well, it gets more worried and when it gets more worried it finds the bottom. So It's kind of motionless right now, although every day seems like a journey. And I think that's probably the way it's going to be through the rest of the year. Yeah, I think that's a good way to put every day does seem a bit like a journey as it has been in 2022. And it sounds like that's what 2023 is shaping up to be As well. How real and palpable are the recession worries? I mean, do you think the US economy will see a recession in 2023? Well, I think if you watch the news channels, the business channels, you think there's gonna be a recession because every day it's topic A B and C. If you go to an airport or you go to a restaurant, you don't think there's a recession looming because it's hard to get on a plane and not feel like you have somebody sitting next to you on top of you. It's hard to get a reservation at the restaurant you probably want to go to and we'll probably see some reports out of some of the better consumer companies like lululemon and they're gonna be just fine. I think the reality of higher rates is starting to hit people. They've had two years to save some money. They're starting to spend some of that money and how deep they get into that wall. It is going to tell you if we're going to have a recession and if so how deep that's going to be. That's right. Credit card debt. I think a real concern Um for a lot of people out there, we know more than half of Americans actually living paycheck to paycheck. How would you compare what we're expecting in 2023, uh the journey if you will or maybe something other than that that investors should prepare themselves for versus what we've seen so far in 2022. We've seen a big correction in the markets, particularly the growth ear parts of the market. I think we've seen rates obviously skyrocket this year and the Fed doing their best to tamp down expectations and tamp down the growth of the economy. I think that's winding its way through the system. Um, so we're obviously closer to this rate rise period ending than we were six or 12 months ago. My sense is the market has already seen it slows, like we saw in June, I think earnings are definitely slowing, but I think the overall, the health of the consumers can be far more resilient than people think. And the concern, I think of the government, both the Fed and the regulators, if you look at some of the concerns they have, we've seen some concerns of the real estate market this week is people want to get ahead of that. So obviously, we saw the news about curtailing redemptions for some of the bigger funds and real estate this week. I don't think there's any problem with those funds, but they're worried that there's gonna be a problem and so they want to get ahead of it. Which is what the Feds trying to do because they were late and what I think the regulators are going to try to do In 2023. So, again, I don't think we have a looming problem. What we have is a looming fear. That's the problem. It's a very small nuance. But I think that's what's curtailing growth and we're gonna have a much more modest growth expectations for 2023, which is exactly what the Fed wants. Okay, so then let's talk about what this does. I mean for the market mark, we know there's trillions of dollars obviously in the stock market that moves on any given day? Do you think that we could retest the lows and set new lows in 2023? I think there is a chance, but I'm not in the camp that we are going to, I think that you're seeing deflation and food pricing, you're seeing it and obviously in energy, you're seeing some rolling over in terms of demand on some of the commodities that we've all talked about that should temper the Fed's expectations. That inflation is running rampant. I still think the consumer is alive and spending. Um, I think you're gonna see this slowdown in spending that we've been talking about. So I am in the camp that we're not going to test those lows, but we're also going to be able to be able to buy some of the stocks that have gotten trounced in 2022 because there's gonna be days like we've had three or 45 times this year where Microsoft is down 10% or some of the best companies that we look at every day are down 10 or 15% and those have been great buying opportunity. If you've been resilient, you've had some capital and you've been dexterity to buy it and sell these stocks at the right time? Let's talk more about the stocks that look attractive to you, do they run the gamut across sectors. Are you focused on just a few industries for now, You know, they run across the gamut. I mean I think there's there's a lot of the growth here. Parts of the economy has obviously taken a big beating this year and we've been recommending Uber for some time. I think you've seen a big change in terms of how they're running this business during the last few years than the way lift has. And I have great respect for the way Uber has run their business. And at these valuations they continue to gain market share their obviously their Uber, each business is also doing extremely well and I think that's a very recession resistant part of the market because it's kind of an affordable luxury for a lot of people. Are you looking to offset any of these some of these growth investments that I know you mentioned do look attractive perhaps with more defensive plays dividend payers out there that could lessen the blow if we do in fact. Well you you listen you have that's a very good point and you have some of the tech names that have traded off. We mentioned Microsoft earlier, they continue to gain market share. Their cloud business is continue to take off, they are paying a dividend and the stock is trading at valuations that hasn't seen in some time. So I think you can temper some of that value with some growth and I think you're getting it at a reasonable multiple right now. We've looked at things like salesforce, which has been in the news, all several key executives have left. That's trading at a multiple. It hasn't seen since its I P. O. I mean that's 20 years ago, more than 20 years ago. If you believe the economy is going to be resilient and where Salesforce trading, Marc Benioff has obviously fully engaged, taking a look at Salesforce now at 100 and $30 a share I think is a very attractive entry point for that stock. Do you even want to touch international markets right now? Of course, we have developed countries and europe europe dealing with its own set of challenges with Russia's ongoing invasion of Ukraine and emerging markets in a different position to, well, we focus here in the States and obviously have a big eye on ASia and bigeye in europe. I think some of their systemic problems are far more difficult than the ones that we face here. I think our banks are highly capitalized. Their their leverage is far less, their capitalization is far more superior and I do have a fear that some of the european banks are far less well situated for a tougher winter and a tougher economy and I think some of the recession fears for them are absolutely in order and their inflation environment is actually higher than ours. So I'm a little bit more leaning that we're the best house on this block. Yeah, I think a lot of people would tend to agree with you on that front, Mark Lehman as ceo of the asset management from JMP Securities, a citizen's company. Mark, thank you.