Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management joins Cheddar News to discuss the markets. 

Stocks Open Higher After Dow Enters Bear Market

now, I want to bring in Michael Landsberg, chief investment officer at Landsberg Bennett wealth private wealth management to discuss these early market moves this morning, Michael welcome. Right now, investors are convinced that we're headed for an economic downturn. How do you feel the Fed is handling the inflation situation and you see the market going higher or lower from here? Good morning. I don't think the Feds handling it particularly well, given the fact, I think last year would have been a better time to raise rates. I think a little bit behind the eight ball now trying to raise rates to get inflation under control. So although this is a good, good market open, I'd probably take the opportunity to lighten my sock exposure specifically in tech discretionary and look for some places, a little more defensive. Now, the Dow dropped more than 300 points on Monday, putting it in a bear market after falling more than 20% below its most recent high, with the Dow officially in bear-market territory. What do you see ahead again? I see a little bit more of the same until the Fed kind of get this under control with, with rates and I think they're going to raise rates more than people think. And I think that's gonna put more pressure on stocks, but still valuations aren't particularly attractive and yes, some stocks have fallen a lot, but obviously the earnings deceleration is questionable here. So the pes, when people look at stocks and say, oh, this is attractive stock. I think they're looking at last year's earnings and saying it's attractive taking it into into the next step is what's what's the earnings going to be in a recession. And I think there's very few stocks that are pretty attractive. Specifically tech. I think it's very unattractive at this point given the fact that I think higher rates are gonna gonna compete with tech and there's some stocks, you know that that got to bubble levels and they're slowly coming back down to reality. You mentioned a couple of segments that are attractive, perhaps not so attractive. So what do you think investors should be paying attention to right now? How are you advising your clients? I think typically most clients I think seem to just play the long end of the game. And just on the long side, um we've actually uh you know implemented some shorts this year. We're short europe than short all year europe were also short, high yield bonds. We think obviously higher rates, puts more pressure on lower quality companies. I think that's a good place to be also our largest position this year has been the U. S. Dollar and that's typically not a position that we have a large stake in. But it happened to work out very well this year, primarily because the volatility, the dollar is actually low volatile asset. It's done really well. We think it continues to do well with what we see over in europe, with them raising rates into a worse backdrop than we have and obviously, you know, the pound doing poorly, the end doing poorly. So I think most people look at just stocks being long. I think you can own some things that are different than stocks, you could be short. Um There's a few sectors in the US we do like I still like some of the larger healthcare and pharmacy and the pharmaceuticals and there's some utilities I think still are attractive but it's it's a much tougher picking here in the U. S. Um Given the fact that we still think we're in a downtrend, you mentioned europe, let's talk about the british pound, which rebounded slightly after dropping to a record low against the dollar. How should U. S. Investors be concerned about what we're seeing in europe? Could we go into a global recession here? It's a great point. I think europe is kind of leading us here in terms of the fact that inflation there hasn't subsided. I would tell you, I think inflation for the most part here has peaked. We've seen oil started to come down. We're certainly probably not going higher in C. P. I. We're probably headed lower. Can't say that about europe. I think europe still continues to go higher and kind of the elephant in the room with europe is what's going to look like for energy. Um They get a lot of their energy from Russia and the Ukraine. Um you're seeing, you know, kind of anecdotally, you know, the the Eiffel Tower turning off the lights at night to conserve energy. That's not a great place to be if you're european investors, so we'd stay away from europe, in fact, actually were short europe. Um There is a concern for a lot of us businesses that sell the europe, some of those multinationals, I'd be a little bit concerned about um you know, where they're gonna get their their their earnings again, the U. S. Is having a slowdown. Um It may not be a slowdown, like, like the european sea, but certainly a tough place to invest if you're, if you're looking at europe, so we're trying to avoid europe, in fact, like I said, short europe, um and looking for places that don't have a lot of european exposure in the US Michael, what could be the catalyst to turn things around for these markets. I think a lot of, it's got to do with time, we've had three plus good years of markets. Um you know, part of this is just, you know, paying a little bit of the piper, if you will, we've had three good years now, we're gonna have, you know, a four year. Um you know, the goal here, I think would be for them to get inflation to a reasonable number. I think they're gonna have to raise rates to the point where they're very close to where um where C. P. I is historically when we fought inflation, we got rates, Fed fund rates above inflation. Um You know, given that backdrop, I think you're gonna see rates have to go probably north of five and that probably then is some healing. But it's time, I think everybody wants things to be super fast and super quick and sometimes it just takes some time to do that. And this is a time to be really positioned. Um You know, for if you will metaphorically, I'm in florida. So the hurricane if you will is to hunker down a little bit, don't be aggressive with your portfolio. It's a time to make sure that you've got, you know, a way to preserve capital and kind of wait this out a little bit and then see an opportunity to be able to selectively look at things you want. Um While again avoiding the things that are going to be potentially even worse than people believe Now. We've also seen the Fed obviously moving here with these interest rate hikes attempting to bring inflation down to 2% here based on what you've seen so far. Are you bullish that they will be able to do that? Not really. I mean, I took a look at the five minutes from a year ago when inflation was 4.3 and they predicted that this month inflation would be 2.2. So not only did they not get it right by a wide margin, they got the direction wrong. So I don't have a lot of faith in the fact that they'll get it right. I think we're looking at a hard landing, I think I'm gonna have to raise rates ultimately. Again, time does heal those wounds. So we'll get rates to a point where inflation starts to come back down demand destruction. You know, if we enter a recession as I think we we certainly had two negative GDP quarters, um, and where I grew up, that's that's a recession. I think that's gonna ultimately get us to a point where the Fed will have to start easing. But I think we're away away from that. I think people obviously got caught flat footed for some reason thinking they're gonna lower rates in the first quarter of next year, and I don't see that happening anytime soon. Well, Michael, thank you so much for your time and for your insight this morning. That's Michael Landsberg, chief investment officer at Landsberg Bennett, Private wealth management