Stocks closed mostly flat Friday after several days of gains and on the back of a stronger than expected June jobs report. That report will likely keep the Federal Reserve on track to keep raising rates. The Nasdaq also rose for the fifth straight day as all three indexes closed up for the week. Loreen Gilbert, President of WealthWise Financial, joins Closing Bell to discuss today's close, recession risks, capex priorities, and more.  

Closing Bell

Stocks Closed Mostly Flat After Stronger Than Expected June Jobs Report

let's turn back to those major averages joining us now, Lauren Gilbert, president of wealth wise. Financial Lauren welcome to the show. Your thoughts on today's close after a stronger than expected june jobs report. Yeah. So the markets were not all that keen on the jobs report because strong employment remaining at 3.6% of unemployment means that the Fed has all the reason to continue to raise rates. So that's why I think we had a pause today, although having said that we had a very good week in the markets up over 3% in the S and P 500 through the week. So we think july tends to be a good month in the market. So that's a good start. The question on everybody's mind is could we enter a recession here in the US, your thoughts here. Lorraine? Well it depends on how you define a recession. If we take the old definition of a recession which was two quarters of negative GDP, then yes, probably so because the second quarter is probably gonna be negative, we saw that Atlanta Fed model looks like a negative 2.1 after negative 1.6 in the first quarter. So if you look at that definition, yes. However, if you look at the new definition by the N. B E. R, which is a significant decline, um then we don't have one. So if we're talking about the way that it's clearly defined now after post the pandemic, then I would say no, we're in a slowdown, most definitely, but not necessarily a recession. Do you think the market has already been pricing in recession risk? It certainly has priced in slow growth continuing rate increases that I think is priced in. I don't think a full blown recession is priced in. And I think that if we say we're really not, which I think we can avoid a real recession Then I think we may have seen some lows in the market and we do expect a much better second half of the year for the markets than the first half. As you all know, recession is on everyone's mind as the federal reserve raises interest rates last month by 75 basis points. Where do you think the federal funds rate could end the year? Well, I think we're looking at a terminal rate of around 3.5%. Uh And so you know, we'll see where where, where we actually end up on that because if we look at uh 75 basis points in july and then maybe 50 basis points and then maybe another couple of 25 basis points. So you know, I think that we need to expect The Fed is definitely committed to bringing down inflation. And what I hope the Fed does is really takes a pause after this next 75 basis points and look at how the economy and the markets and inflation is reacting to all of that. President biden is expected to make a decision about removing some chinese tariffs in order to fight inflation. What are you keeping an eye on Laureen as far as us china trade and the impact of a potential rollback? Yeah, I don't know that that decision is necessarily going to have um an impact on inflation per se. I don't know that there's going to be a direct correlation there. I do think that the inflation when we look at five year numbers by the way the break even five year has come way down. So even though I think that we're still gonna see another increase this next week, when we hear about headline inflation numbers, I think that when we look at the fact that oil has come down significantly, I think that we're going to start seeing an ease and inflation eventually and certainly we expected over time that five year number, like I said has come way down. Let's talk cap expending. What sort of shift have you seen over the past few years? Where do you think companies should be making their money work? So this is something that we're watching very carefully increased. Expending And where is there an R. I around that Capex we're looking for companies that are putting money to work in their companies were also looking at free cash flow. We're looking at increased dividends and we're looking at shared buybacks and I think that combination of all the above are the companies that can make it through the slower growth that we're going to be seeing. What strategies or assets lorena you particularly watching right now, that are hot right now. Well, I think there's a lot for investors to consider. I think that the tendency right now for investors is to become more conservative when in fact most people should probably be looking at increasing equity exposure. And the reason I say that is with the downturn that we've seen here today, which has been significant both on the equity and fixed income side. Then once again, investors may not be allocated properly. So we're looking at ways to start increasing equity exposure over the next few months and we can never know exactly where the bottom of the market is going to be, but slowly increasing some equity exposure and then within that equity exposure, looking at various parts of capitalization. Certainly large cap is the more conservative area to be adding money into for those people that have more of an appetite for risk and are able to sustain the short term, adding perhaps some more in small cap as well. And then even on the fixed income side, looking at increasing duration as we've seen interest rates rise, we're starting to look at the opportunities in longer term duration, both on treasuries and incorporates Lorene Gilbert, President of wealth wise Financial, we always appreciate your insight. Thank you so much Lauren have a great weekend