Nancy Tengler, CIO and CEO at Laffer Tengler Investments, joined Closing Bell’s Kristen Scholer to break down Monday’s trading action, and look ahead to the Federal Reserve’s upcoming decision on interest rates.

Stocks Close Lower to Start Shortened Trading Week

but I want to turn back to the major indexes joining me now is nancy tangle er C. E. O. And C. I. O. At laugh furtwangler investments nancy always good to see you and we did have you know, kind of a bit of a down day obviously in the stock market today not severe losses. But what do you make of the trading action that we've seen of late? Well kristen thanks so much for having me. Um Well I think a couple of things you know we we have been saying that we thought that inflation peaked in in june and I think I think it has uh and the C. P. I. And P. P. I. Numbers that came out um provide some evidence but we still have a long ways to go. And then in addition to that we've talked a lot about buying stocks when inflation peaked has historically been a good time to buy them. There tends to be a symmetrical relationship between rising inflation and declining. So if we peaked in june That was about 14 months from trough to peak, then we're on our way to um you know, smoother sailing in another call it 9-8 months. And that that should be good news for investors as the Fed steps back and begins to see uh that what we're seeing in the leading data is in fact coming true in the act. So nancy, how would you expect that that will play into the Fed's policy going forward. I think there are different expectations whether we see another 75 basis point rate rise in mid december or whether it's 50 basis points and then of course the path from there knowing that rates will rise, but perhaps at a slower pace. Well, I think we, we ran into trouble when the Fed began to become data dependent. Um, you know, there are some flaws on how we calculate for housing in, in the, in the numbers. It's, there's an immense lag and the same with healthcare, which was one of the big declines in this last report, but artificially had been higher in previous reports. So if you look at the things I'm looking at and most investors are looking at, you know, supply chain pressure index is down, manufacturing delivery time times are down, shipping costs are down lead times for deliveries are down, inventories are up and we've seen that reinforced and all the retail reports we've had in the last week and, and backlog in orders is down. So you've got a number of issues that would put, you know, disinflationary pressures on prices. And I think the Fed needs to start paying attention to some of those indicators because if we just look at backward looking data, we're going to be way behind just like we were way behind in in raising earlier this year, they're gonna be way behind and really do some damage. If they don't, you know, pause and cut soon enough. Are there certain stocks or even sectors, nancy stocks within those sectors that might be looking more attractive these days? Yes. Well I think so, Kristen you you know, energy has been a great um play even if you're grossly overweight the index, it's still not a very big portion of most portfolios. We still like energy but we, you know, we're cautious as we as we go into recession. Um A lot of that's going to depend on china reopening. Health care is a good place to hide. And then we started to invest in In a theme that we really like which is old economy companies embracing the digital revolution and the providers of that technology. And so these would be some of the names like a CVS where they've got 46 million digital customers now or Mcdonald's that is using you know digitization to reduce the number of employees. I mean if you have if you have a labor force participation rate problem like we do you want technology to continue to solve those problems? And so then the providers on the cloud are also some of our favorite names. That would make sense. Indeed. What is the path forward for inflation because whether or not you're an investor nancy. I mean uh americans, it's impacting their wallets cos it's impacting their ability to hire workers. People are getting laid off of course in the wake of the environment that we see um The Fed maintains that higher rates can bring down inflation over time. Are you confident in that? Well, I think it's, it is coming down Kristin, but I think this whole notion that you have to, you know, the Fed has a dual mandate, it's full labor force and um you know, low unemployment, let me put it that way and price stability. And we've had neither really, if you think back, they were focused on one over the other and that was jobs over inflation about a year ago. When by the way, the dot plot said we weren't gonna see any rating increases until late 2023 24. That's their own estimate, right? And then now they're laser being focused on basically uh disrupting, I don't want to say destroying but but causing pain in in employment at the at the risk so that they can achieve their second, there is a way to do both. And I think this this Fed has been Pretty much wrong at every turning point um since 2018. So I'm hopeful that you know, we'll see some reasonable heads prevail. We won't have to, you know, take unemployment to 5%, but we can maybe destroy the job openings and jolts which are still around 10 million but not cause so much pain on us households and especially the lower income cohort, which tend to get hurt the most. I know that's been a problem of course with rising rates too right? We've been covering how credit card debt is just absolutely ballooned here this past year or so nancy? The other big news? I and today of course was kind of the surprise, at least. It sounds like two former ceo bob chapek of Disney, that bob Iger was reinstated by the board to lead this company yet again, beloved leader at Disney for many years before the pandemic, what's your take on Disney stock? So the stock has been horrible. We owned it in two of our large cap equity strategies when the board actually renewed shape X contract in june after so many missteps, we we sold it in are more risk averse equity strategy. And also because, you know, once when they suspended the dividend and Covid they were going to reinstate it. And there's been no guidance on that. And this strategy really, um, is for focused on dividend growers. We kept it in a more risk on strategy but have not added to it on weakness simply because we just didn't think he was up to the task. So I applaud this news as well as the activist investors, but he's got, he's got a hall because he's not Iger has not had a background of cutting costs. So he and costs need to be cut and they've raised prices so dramatically that they have a low, some of their most loyal patrons of the park. So they're a lot has to go right for this thing to work. But I think any marginal piece of good news, the stock will rally. Are there any similarities between what we see what Iger brings to Disney, what he's brought to Disney similar in some ways to another West coast company. What we've seen Howard Schultz do for Starbucks in the past leave and then return again and again. Um Yeah, I do think so. But you know, what's interesting to me, kristen is that you would think these companies would have a deeper bench of candidates. You know, bob Iger tried to leave a couple of times and his replacement in one case left and then I think he stayed on and then ultimately we got to pick Howard Schultz has come back three times and and so, you know, they are iconic leaders. These are iconic brands, but I think, you know, it does speak to um grooming for succession and we heard a similar refrain when tim cook took over for steve jobs. I don't know if you remember that, but everyone was up in arms. He's no steve jobs and yet he's done an exceptional job because he learned at his um at his desk, let's say so. I'm a little surprised that there isn't more depth within the company, these companies and I hope that bob Iger will know when it's time to leave this next time so that we can see a next generation of individuals, you know, take over and and grow us into the next gen. All right nancy Tendler ceo and Chief investment Officer Lafferty angler investments nancy. Thank you as always.