U.S. stocks closed Wednesday's session mixed, with the S&P 500 closing lower for a fourth straight session, as consumers react to economic data showing that consumer confidence fell in June amid rising concerns about the nation entering a recession. Nancy Tengler, Chief Investment Officer of Laffer Tangler Investments, joins Cheddar News' Closing Bell to discuss. 'Indicators show we're not in a recession,' she says.

Closing Bell

U.S. Stocks Close Wednesday at Session Lows

let's turn back to the major indexes. Mixed day on Wall Street after some selling pressure yesterday, certainly in the stock market joining me now is nancy tangle er Chief investment Officer at laugh furtwangler investments nancy always good to see you. What is your reaction to the stock market right now? Oh kristen it's day by day. I think you have to kind of treat it a little bit like white noise. You know, we get the algorithms, reading the headlines in the morning and we get sell off as a result or or a big rally as short covering comes in. But I think we're starting to see in the economic numbers that some of what the Fed is doing is actually having an effect or maybe I should say some of what the bond market has done because I think they've done the heavy lifting for the Fed is starting to have an effect on the economy And that could actually be the bad news is good news for stocks as we, as we move through the summer, interesting as. So the last time we spoke nancy was about a month ago, I was in the depths of the market selloff in May, if I remember correctly. And you were saying that some of your clients were actually interested in putting money to work Amid the recent pullback. And at that point, of course, the lows that we had seen after the year of 2022. What's the general sentiment that your company right now is the chief investment officer? Are you putting money to work or waiting on the sidelines? No, no. We're we're folding it in. I think it's it's time for investors to look at their portfolios and say I want to add, I should probably be adding in some risk here. So that when we come out the other side they'll participate. So we've, we've added some names in, in technology. We've added some growth thier names. I mean, for example, in our in our growth strategy we've we've added lulu lemon but we also added Spotify, which we actually think is somewhat defensive. And then we added in our in our value strategy, we added to a position in oracle and added to holdings and chub and and Abbvie and and still have a pretty strong commitment to, to technology in that portfolio as well. So I think you want to be deliberate, uh, you don't want to be continuing to think this is the bottom. You just want to do what you do with your 401k. You add some, you wait, you add some more and you buy great companies that I think will be a generational buying opportunity when we look back on this period. So doesn't matter nancy if we head into a recession, I mean for the major indexes, certainly some expect we could pull back further from here. As you mentioned, I can't guarantee that the bottom has actually been set. But there are other bullish calls that the S and P will set a new record high before the end of the year by Jpmorgan for instance. How much does a recession matter to this stock market? Well it kristen it depends on how deep it is. I mean we knew that the economy was slowing coming into 2022 just based on the base effects from 2021. So we have been positioning our portfolio to add in reliable earnings growers and companies that are raising their dividends and and that's that's been a good decision. But I think if we get a deep recession then then all bets are off the market will sell off further. I don't think we're in recession. I know there's a lot of people that think we are maybe it's just a technicality we are certainly slowing and um but I think if you look at all the historical benchmarks, so yield curve inversion, leading economic indicators, credit spreads widening, we just aren't there yet. I mean the economy coming into this was much stronger than previous periods when we've had very high inflation. And so I think that that helps and the consumer is working and that's also good news even if if their, you know their paychecks are getting eaten away by inflation, their jobs right? You're right and the jobs market very strong. Obviously the Fed chair reiterating that in Portugal at the E. C. B. Forum earlier today as well. So nancy, you mentioned some companies that you've been adding positions in Spotify lululemon Abbvie chubb oracle as well. What's the time horizon here? I mean for people who are looking to get back into the market, Certainly if you have a retirement focus, um, and you want to add to your 401K over decades, it could be a good time. But do you plan on holding these companies for years or these short term investments? No, we're long term investments investors Kristen and I would argue that every investor should be a long term investor because we don't know what kind of exogenous shocks we're gonna have or, or when we're gonna have a policy mistakes out of Washington. Like we've seen this this last year. And so I think you, you want to be looking out 3 to 5 years and and seven if possible and, and then you can have the courage to step in and and just incrementally add to positions. I'm not, you know, I'm not saying this is the time to buy stacks, but I am saying it's the time to buy companies that have been beaten up, but that have strong balance sheets and pricing power and not the non earners, which is what we saw sort of, you know, in the previous heydays, you want great companies that have the wherewithal to withstand a slowdown. Well, another question that I have is these risks and shock factors as you mentioned nancy. Of course, china, zero tolerance policy, impacting global supply chain Russia's ongoing invasion of Ukraine obviously impacting the supply chain, especially prices at the pump as well. How you factor those into your thesis? I mean, how long could those remain risks? It seems in some cases like it is unknown. Well and and definitely the market has has factored that in. You're absolutely right. I think the market is discounting the worst case scenario and so I'm not arguing that we're gonna bounce off the lows here. I think we're gonna have a choppy summer as this all kind of comes out. I mean, we know that the P. M. I. Is the uh purchasing manager indices have rolled over globally and domestically that the manufacturing P. M. I has a pretty high correlation with corporate earnings and we've not seen earnings revisions come down. So I think that's gonna be the theme of of the second quarter earnings calls, maybe some forward guidance coming down. But I actually think some of that's priced in because a lot of the cloud names for example, you know, they generated 30 to 40% revenue growth. They had a rally the next day and then they sold off further. So I think the markets expecting ongoing supply chain risks of that improves and we we did here today from the head of the L. A. Airport that that things are starting to pull through the system faster. We're seeing inventory inventory is built not just at retailers, but I mean uh and in the wholesaling side of things. So I think that could be a pause, a net positive china sending reopening could also be a net positive but make no mistake. The market's gonna be focused on inflation and earnings and um inflation as it relates to when the Fed is going to stop raising. Right? So it does seem as if the global supply chain pressure is easing a little bit nancy, that it's definitely a good thing. But what about the risk of another covid variant popping up? I mean, I think a lot of people were caught flat footed when oh, Macron picked up literally the day after thanksgiving last year. Is that something that you have your eye on? You know, I mean I may be wrong on this one, but I think that most countries ex china are learning to live with the variant of covid and variants. Uh so I don't think that's really unless we go into economic shutdown and I don't think americans have an appetite for that and I really don't think the rest of the world does. So I'm more focused on, you know what drives stocks over the long term and term. And then at the end of the day it's earnings wars matter, of course I've managed through a couple of major incursions and they matter until they don't and when the economy starts picking back up unfortunately. Or fortunately for investors, I guess people start to turn their attention to the fundamentals that that drive stock prices. But you know, this this could get a lot worse before it gets better in Ukraine. And the one thing I think we're starting to see is United NATO, United, european Allies, the G seven meeting, etcetera. So hopefully, you know, we'll see some progress there. But I think the other factors are going to matter more to the markets. All right, nancy, tangle, er, Chief investment officer at Lafferty angler investments and nancy, Always good to get your take. Thank you.