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Speaker 1: Our guest for the half hour is Nancy Tegler. She

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Speaker 1: is the c I O also the CEO at Laffer

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Speaker 1: Tegler Investments. She joins us from Lake Tahoe. Nancy, always

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Speaker 1: a pleasure, thanks for being with us. The FED has

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Speaker 1: clearly got an inflation problem that's pretty big, and it's

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Speaker 1: not gonna be really clear for a while yet. In

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Speaker 1: terms of gauging the effectiveness of higher interest rates. How

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Speaker 1: much more do we have to go in terms of

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Speaker 1: the rate story? Do you think? Well that that, of

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Speaker 1: course is the question of the hour. I think that

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Speaker 1: we'll probably see the Fed pause at the end of

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Speaker 1: this year. They're likely to go seventy five. We've been

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Speaker 1: advocates of, hey, let's get this front endloaded and get

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Speaker 1: and get an attack, an effective attack on inflation. But

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Speaker 1: they've been pretty deliberate, a little bit faster than than

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Speaker 1: some may have thought, a little bit slower than many wanted.

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Speaker 1: But I think we'll get the seventy five, maybe a

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Speaker 1: fifty and twenty five, and then I think they're done

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Speaker 1: for a while. I mean, we really did see, uh,

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Speaker 1: all the indications that inflation was rolling over U. So

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Speaker 1: I think this number, uh, it may be revised. It

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Speaker 1: may just be an aberration, but I do think we're

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Speaker 1: at peak inflation. Yeah, inflation has proven more enduring now

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Speaker 1: than both the fit and the markets clearly anticipated. So

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Speaker 1: we had a little bit of a rebound today on

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Speaker 1: for U S equities. Do you think rebounds going ahead

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Speaker 1: from here are going to be a little bit more cautious? Well,

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Speaker 1: I think we have to all remember that in the

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Speaker 1: very near term, as in yesterday, what drives stock prices

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Speaker 1: are the computers, the algorithms, and hedge fund traders. So

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Speaker 1: you get these outsize moves off of the headlines, but

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Speaker 1: that once we step back and take a look. I mean,

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Speaker 1: if you think about what what drives inflation, we saw

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Speaker 1: p M I S had, particularly manufacturing have started to

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Speaker 1: roll over. Inventories are up, prices paid are down, delivery

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Speaker 1: times have improved, which means a supply chains are easing,

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Speaker 1: freight costs are down, Housing has rolled over, and then

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Speaker 1: we got the inflation break even curve just a few

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Speaker 1: weeks ago that uninverted, and you had the two year

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Speaker 1: at the lowest level since February. So I think what

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Speaker 1: the market is going to begin to do is look

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Speaker 1: forward to the next steps and we are likely to

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Speaker 1: see a recession, but that does not necessarily mean that

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Speaker 1: stock prices can't go up. And so you really want

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Speaker 1: to be focused on companies that have reliable growth. We

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Speaker 1: like dividend growers because that's an indication of their drug

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Speaker 1: growth and it's an offset against inflation. It doesn't sound

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Speaker 1: like you expect the FED funds right to get to

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Speaker 1: four percent at the end of their kind of tightening cycle. Here.

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Speaker 1: Ray Dalio today was saying, if it goes to four

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Speaker 1: and a half, equities could come down about that doesn't

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Speaker 1: seem to be the way you see things right now. Yeah. No,

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Speaker 1: So we think we will get to four probably or

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Speaker 1: close five um. But there are a lot of cross

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Speaker 1: currents that affect this. And and raise a smart guy,

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Speaker 1: I'm not going to disagree with him. Uh, he may

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Speaker 1: be right if we get to four and a half.

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Speaker 1: I'm just not convinced we're going to get there. And

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Speaker 1: I think one of the things that investors are not

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Speaker 1: thinking about are talking about, and that's probably because the

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Speaker 1: Fed's not talking about it, is the implications of of

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Speaker 1: QT quantitative tightening UM. There was a great article over

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Speaker 1: the weekend in Barns that talk that was written by

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Speaker 1: Lisa Bofus and talked about the requirements of treasury supply

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Speaker 1: they're gonna be needed to offset QT. And then you've

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Speaker 1: just got a rising budget deficit. It's been declining, but

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Speaker 1: it's it will be rising. Uh and that that to

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Speaker 1: service that. The CBO estimates that we're gonna need another

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Speaker 1: trillion dollars in treasury supply a year. So there's gonna

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Speaker 1: be a lot of volatility in the bond market uh

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Speaker 1: and and in yields. And I think that a lot

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Speaker 1: of this is going to have further influence on the

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Speaker 1: FED because the tightening effects the FED really can't quantify it.

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Speaker 1: Economists say some were between one percent in rate heights

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Speaker 1: to four percent. But that's that's going on behind the

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Speaker 1: scenes starting tomorrow. So, Nancy, we've been talking about the

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Speaker 1: macro environment, inflation, and what the FID is going to

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Speaker 1: do next. So with all of that in mind, how

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Speaker 1: are you making money out of investments at the moment? Well, Paul,

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Speaker 1: A couple of ways. Um. One is that we think

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Speaker 1: we had said in August we thought bonds were riskier

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Speaker 1: than stocks, and we moved our clients out of bonds

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Speaker 1: into some alternatives and convertible securities. We are now dipping

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Speaker 1: our toe back into the lawn market, building short ladders

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Speaker 1: high quality corporates. UH. And so that's one way. And

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Speaker 1: then within our strategy, as I mentioned earlier, we have

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Speaker 1: a five star morning Star rated equity income strategy, so

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Speaker 1: kind of a workhorse strategy, large cap exposure and and

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Speaker 1: focused on dividend growers. And so we began adding risk

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Speaker 1: back into that portfolio in June, but prior to that,

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Speaker 1: we had been moving a little bit more defen pensive

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Speaker 1: and as I said earlier, reliable earnings growers and reliable

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Speaker 1: dividend growers. So names like Microsoft, Raytheon, e O, g Um,

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Speaker 1: Johnson and Johnson, Broadcom, and Public Storage, those are among

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Speaker 1: our largest holdings. And those are companies that all have

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Speaker 1: meaningful and robust dividend growth. So the trailing dividend growth

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Speaker 1: on that portfolio, it's hard to believe that you could

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Speaker 1: get that in this environment, but investors should be focused

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Speaker 1: on dividend growers for the near and long term. Are

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Speaker 1: you seeing opportunities offshore right now that you're taking advantage of,

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Speaker 1: particularly in Asia, whether it's China or another market in

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Speaker 1: the Apeck, so we we do have exposure to Taiwan

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Speaker 1: and Japan in our global strategy. We had steered cleared

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Speaker 1: of China. Of China, I thought the news today that

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Speaker 1: they are allegedly and discussions with MODERNA could be a

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Speaker 1: game changer. That that country has has really had problems,

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Speaker 1: and I think she has made is really dug too

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Speaker 1: deep of a hole on the lockdown, So that could

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Speaker 1: be very interesting to us and be a catalyst for

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Speaker 1: us to get back in. But we do like still

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Speaker 1: like the US better than rest of world because we

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Speaker 1: think that the reception here will be shallower and less

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Speaker 1: you know, and the strong dollar is keeping our inflation,

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Speaker 1: believe it or not, somewhat muted and hurting the emerging markets. Obviously,

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Speaker 1: in terms of China, the Party Congress is coming up.

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Speaker 1: President she likely to get a third term there. Once

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Speaker 1: that's lockdown, do you see that perhaps the air is

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Speaker 1: clear for some reform and a few changes, and would

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Speaker 1: that change the picture for you? You know, he's he

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Speaker 1: has been so unreliable as a leader, and by that

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Speaker 1: I mean in terms of investing in the country, and

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Speaker 1: I think even to his own citizens. I think the

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Speaker 1: mortgage boycotts are are important and not talked about nearly

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Speaker 1: as much as they should be. But I think for us,

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Speaker 1: the issue would be more around the the issue of

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Speaker 1: whether or not they reopen UH and demand begins to return.

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Speaker 1: They do have a lot of leveragetable. We all know

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Speaker 1: that they can, you know, work very diligently with monetary

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Speaker 1: policy and fiscal They can do whatever they want. Um

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Speaker 1: So it may be it may be that that will

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Speaker 1: clear the air. We're probably going to be a little

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Speaker 1: bit slow in terms of returning because the last round

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Speaker 1: was pretty bitter for many investors. UM. It took a

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Speaker 1: lot of market cap out of a lot of names.

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Speaker 1: So we're still finding pretty interesting places to be in

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Speaker 1: the rest of the world. So you mentioned a strong

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Speaker 1: dollar a moment ago, and I'm wondering an whether or

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Speaker 1: not you believe that as the market begins to discount

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Speaker 1: a pause. If you're right, a pause and fed tightening,

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Speaker 1: whether maybe the best days for the dollar are behind

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Speaker 1: us somewhat might be doug I think for for multinational

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Speaker 1: companies that would be somewhat good news. For commodities that

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Speaker 1: would also be good news. We have a strategy that

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Speaker 1: invests in the metals and miners of that are surrounding

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Speaker 1: planetary decogonization, and many of those names have have so

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Speaker 1: you know, many of the medals have sold off pretty materially,

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Speaker 1: and yet we know that as the as the world

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Speaker 1: moves toward green energy, that that those medals are going

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Speaker 1: to be in demand. So it's all been kind of disconnected.

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Speaker 1: We would call it an opportunity to add in some

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Speaker 1: of those names, but in half of our portfolios, a

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Speaker 1: week er dollar would probably be a good thing from

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Speaker 1: an earnings and standpoint, but it's going to put prep

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Speaker 1: pressure on inflation, and excessive government spending is also going

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Speaker 1: to put pressure on inflation. So I think sticky, persistent

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Speaker 1: inflation is here for a long time, all right. Nancy

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Speaker 1: Tangla CEO and ce IO at lefta Tangler Investments, thanks

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Speaker 1: so much for joining us today on the Bloom Big

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Speaker 1: Daybreak Asia