U.S. stocks closed Friday's session higher after a volatile week of trading. The Nasdaq jumped 3% and the Dow jumped 400 points in a comeback that followed significant losses earlier in the week. William Huston, Chief Investment Officer of Bay Street Capital Holdings, joins Cheddar News' Closing Bell to discuss.

Closing Bell

U.S. Stocks Closed Higher Following Week of Volatility 

relief rally today on Wall Street. It was good to see after heavy selling that we had seen since late last week unofficially for the week. The S and P down 2.4% of the NASDAQ down 2.8% of the dow, dropping 2.1%. But the NASDAQ good for a gain of 3.8% today, the S and P of 2.4% And the Dow higher by 1.5%. So let's talk about these major indexes joining me now is William Houston, chief investment officer at Bay Street Capital Holdings. William thanks so much for coming on the show. What is your reaction to today's stock market rally? It's good to see a friday in on a positive note the last six weeks at least have been rough but reasonable. So with all the volatility, I think we're seeing acceptable explanations, but also really glad to see the weekend positive, although overall the market's still down. So what is the outlook from here? I think a lot of people wondering, well, this is a great day. I mean, the NASDAQ was up nearly 4%. Should I get in right now? What do investors need to keep in mind? What's the best way to move forward? Continue looking for? You know, next week. On the 17th, we're looking at retail sales as they come in. We already know that consumer sentiment is at a 10 year low and with all of the uncertainty and volatility. Uh, that makes sense. But at the end of the day, I think people don't like being surprised at the checkout counter. You know, I bought a bottle of aveeno lotion for our son, I swiped it and it said $20 and my first thought was $20 for baby lotion. And I think that a lot of people might be having that same reaction as their, you know, spending money and retail sales in the 17th is really going to see how the consumer is gonna show us how the consumer has been reacting to um the the the the rising prices. My question is, how did the Fed Chair get this so wrong. I mean, up until the fall, the Fed was calling inflation transitory last week. The Fed chair said that he thinks will have a soft landing. And then just yesterday entirely reversing course saying he can't promise a soft landing. What is missing for the Fed right now to calm the markets and get the policy path set. Mhm. I think the market ran hotter than expected. You know, even with the increase of 50 basis points that we expect to continue to see because you know, inflation is higher than desirable at the end of the day, it was later than most people would have preferred prices have have have come up higher than expected. And we are expecting inflation to be here to stay for quite some time. Especially, you know, with the with the war going on with the price of energy continuing to go up with the continued covid restrictions off and on off and on, you know, messing with the supply chain. So it's really, it's really just a function of typical supply and demand. The supply just isn't their demand is still high, is higher than was expected. And we're seeing that across all sectors. So what does this mean for the rest of the year? William? I think people also wondering have we reached the bottom, was the bottom on Wednesday in the stock market and are going to go up from here? What's your answer? Mm hmm. So you're right. I think we're on a thin line between bouncing back and then entering into, you know, a bear market After retail sales in the 17th, the following day, the 18th, we're gonna see housing starts. So that's gonna give us some some insight on how the housing market has been responding to the rise of, of interest rates. So I wouldn't try to look too far ahead. I would take this one day at a time, continue looking at the data and then making sure from a portfolio standpoint you're holding companies that fundamentally our sound investments. You know, we like to tell folks that hope is not an investment strategy. So make sure with what you're holding, you've adjusted, you've got your cash position in place. So that if we do go into that bear market territory, you're not reacting late, you're well positioned moving forward and just taking this one day at a time? Okay. So another question that I have is clearly the economic data matters now right? I mean almost on a daily basis consumer prices soaring stock market tanked producer prices, soaring stock market had a hard time absorbing those as well. So I think now maybe more than ever William this, you know this economic data really does seem to matter on a day by day basis. Is that gonna dictate the path forward on these economic points that we get each day and could that lead to more volatility? Absolutely. I think the market is very smart that the retail investor is also looking at data that they didn't used to to consider in the past. And as a result again we're looking for acceptable explanation. So as you mentioned, C. P. I. Data did come in higher but it wasn't unreasonably higher. We were all hoping for something under that 8.2 mark, we came in at 8.3, you know the market opened high on on on Wednesday and then it came down as you know, as we went into the market and that's what really should have happened. So um as we're as we're moving forward on a day to day basis. Absolutely fundamentally the economic data that we're looking at is is important. And underneath that the companies the companies that make up these indexes, we really want to take a sharp look at what are the underlying holdings of these E. T. S. Of these mutual funds. And am I holding something that from a value standpoint accounting for where the where the decline has come? Are these companies still overvalued or am I am I in a good position right now, regardless of what's happening moving forward for the long term. So what are the percent chances at William that we do reach a bear market that we fall further from here? What's the risk reward scenario? I think it's likely based on the trend that said it's impossible to time the market. So for me to give a percentage would be uh I would be lucky if I were right and I'd be like, I would be unlucky if I were wrong. So what I would say is I still think fundamentally the economy is strong. It's not surprising to see us come down from an all time high, that's reasonable. We don't want to come into that 20% decline rate. Nobody wants to see that happen. But at the end of the day, you know the numbers on Wednesday and thursday and onwards don't look positive. That would not be again an unacceptable thing to experience moving forward. And investors should really be looking at, okay if this happens, what is my what is my current portfolio is in a line with my long term goals moving forward and if not adjust based on that, Not necessarily based on some some some economic data that comes out next week. Okay, so very quickly as we watch each data point tick by tick what are the positives that you see out there right now, William Other than the jobs market, I still really like the housing market, you know, prices are coming down as rates have continued to come up, but we're not seeing any sort of uh well say like red flags in markets that are already strong. I do think that there are certain markets that have, again, they've just come up too high. Austin. Austin rates are extremely high. A lot of the rates in Arizona in terms of rent and purchase price are extremely high. So in certain markets like that, I do think that we'll see prices come down faster than others. At the end of the day, the housing market is still very strong, rates are up, is making mortgages more expensive, but we haven't seen an unreasonable decline as it pertains to people. Actually, purchasing homes has been more of what we've been expecting. So I think that's a good sign. Okay, William Huston, chief investment Officer of Bay Street Capital Holdings, William, thank you so much