Lorenzo Esparza, CEO of investment firm Manhattan West, joined Cheddar News after a mixed day on the trading floor after the release of CPI data and his thoughts on what lies ahead with inflation.

Closing Bell

What Lies Ahead in the Markets After January CPI Data

Next day on Wall Street and joining me now is Lorenzo esparza's ceo of the investment for Manhattan West. Thank you so much. Lorenzo for coming on the show here mixed day. What do you make of the stock market? Well, happy valentine's Day, thank you for having me. And uh you know, today has been an interesting day, I think it's been flat. I think everything's been so tied to what's happening with inflation and what was happening with the print today. Obviously a slight slight reduction in what we're seeing. But I think that's really just a function of uh investors being cautious about earnings this week and cautious about what's happening in the global economy. So I think we're just gonna get a mixed bag for a little while. How I mean, your firm, you're the ceo of Manhattan West, how are you viewing this inflation report? So of course, price gains the pace of price game sticking a little bit lower on an annual basis, but up half a percent in january versus december of last year. And certainly surprising economists. Yeah, look, I think, I think we're gonna be in a position where inflation is gonna run high for a little bit longer. Obviously the 2% target is a long way away. So for that too, you know that battle that continue for the remainder of this calendar year. I think it is highly likely we just we just have some, some ways to go. We still see some sectors of inflation that are even though housing prices are declining rental costs are going up heating and food costs are still up. So I just think we have a little bit more of a of a softening to happen over this calendar year. So what would you recommend? Lorenzo to ambassadors? Certainly. I think the fomo trade fear of missing out has been on display this year with the NASDAQ up double digits and some decent gains really across the board including today in the wake of this inflation report. You know, it's interesting, I think when, when the 10 year broke below 3.5, uh, that really gave rise to a lot of the tech companies that came out from the meme stocks and some of the, uh, you know, the bigger name, tech companies having a recovery from last year, but almost somewhat of a reversion to the mean effect where all of a sudden, you know, these names that were down 30% last year in the NASDAQ now all of a sudden, you know, are having an opportunity to bounced back. But you know, we're still seeing a lot of volatility. I think the reason you're seeing folks come in is that story started to soften and you can get into these growth names. But all of a sudden then, you know, the shorts went against all the tech names and the market went back to giving up some of those games, you know, I think geopolitics still at risk and of course it was almost this time last year, end of february that Russia decided to invade Ukraine. That invasion obviously still ongoing. Plus recent news of other geopolitical matters like these like the chinese spy balloon that was shot down and other unidentified objects floating around our atmosphere. How do you factor that into an investment thesis? Well look, I think we've always had an impression and a belief that you know, a proper diversified portfolio should include alternatives. Right? So exposure to fixed income equities and then alternatives. That's been our way of of combating some of the some of the volatility that we saw last year. But you know, we view the geopolitical headline risk as a relatively significant risk to portfolios. Right? We still assign a little bit of a probability that, you know, Russia could potentially drop a low grade nuclear bomb in in in Ukraine. And that could obviously disrupt markets in a significant way. We still think that china and Taiwan issue is is rather problematic. And then, you know, if the Fed continues to lift, you know, we still think that's a quite a bit of risk to global equities. So we're remaining defensive by owning, you know, short duration fixed income owning, um you know, exposure to global equities, but also having plenty of exposure to alternatives to to withstand the volatility. All right, Lorenzo, as far as the ceo of the investment firm at Hot West. Lorenzo, thank you so much