1 00:00:00,080 --> 00:00:02,120 Speaker 1: Let's get to Layla Pence. She is with us for 2 00:00:02,120 --> 00:00:05,400 Speaker 1: the half hour. Layla is president at Pennce Wealth Management. 3 00:00:05,440 --> 00:00:08,000 Speaker 1: She's on the line from Newport Beach, California. Thanks for 4 00:00:08,039 --> 00:00:10,040 Speaker 1: being with us, Laila. Give me your sense of what 5 00:00:10,160 --> 00:00:13,080 Speaker 1: happened today. This was an amazing rally in the equity market. 6 00:00:13,760 --> 00:00:18,000 Speaker 1: Sure was well needed. I think, you know, market has 7 00:00:18,040 --> 00:00:23,360 Speaker 1: been uh, certainly oversold. And and then you know they're 8 00:00:23,360 --> 00:00:25,400 Speaker 1: looking at the dollar for the last three days a 9 00:00:25,480 --> 00:00:29,080 Speaker 1: dollar has dropped and that should do very well from 10 00:00:29,120 --> 00:00:33,320 Speaker 1: multinational earnings in the future. And I think that happened 11 00:00:33,320 --> 00:00:36,680 Speaker 1: because the ECB is because she's going to raise interest 12 00:00:36,760 --> 00:00:41,040 Speaker 1: rates on Thursday by fifty business point, we should lift 13 00:00:41,360 --> 00:00:45,720 Speaker 1: the price of euro against the dollar, and so and 14 00:00:45,760 --> 00:00:47,800 Speaker 1: I think there's the market has just been oversold and 15 00:00:48,080 --> 00:00:51,720 Speaker 1: the earnings certainly from the financials have come in a 16 00:00:51,720 --> 00:00:55,000 Speaker 1: lot better. And and people are you know, I think 17 00:00:55,680 --> 00:00:58,400 Speaker 1: maybe maybe for a little while here turning in the corner. 18 00:00:59,400 --> 00:01:01,480 Speaker 1: So is that it can we say the bottoms in? 19 00:01:01,760 --> 00:01:04,800 Speaker 1: Is this a good entry point now? I'm not sure. No, 20 00:01:05,240 --> 00:01:07,640 Speaker 1: I think there's still we still have all the earnings 21 00:01:07,640 --> 00:01:10,440 Speaker 1: of the rest of the tech sector and so forth 22 00:01:10,520 --> 00:01:12,640 Speaker 1: coming up and we don't know what kind of surprises 23 00:01:12,760 --> 00:01:16,039 Speaker 1: or or we're going to have, and of course we 24 00:01:16,040 --> 00:01:18,720 Speaker 1: still have inflation. But I do think on a short 25 00:01:18,800 --> 00:01:22,880 Speaker 1: term basis, um you know, we have you know, we've 26 00:01:22,920 --> 00:01:26,360 Speaker 1: been really oversold and it's really stocked by stock. Uh 27 00:01:26,600 --> 00:01:30,000 Speaker 1: picking from this point on to see what's going to 28 00:01:30,080 --> 00:01:32,600 Speaker 1: happen with the earnings, maybe you've got a chance to 29 00:01:32,600 --> 00:01:36,839 Speaker 1: see that the Atlanta Feds GDP NOW index, it indicates 30 00:01:36,840 --> 00:01:39,119 Speaker 1: that maybe maybe in Q two will see some kind 31 00:01:39,120 --> 00:01:41,440 Speaker 1: of contraction, maybe at a rate of around one point 32 00:01:41,440 --> 00:01:44,360 Speaker 1: six percent. If that's the case, if the economy is 33 00:01:44,400 --> 00:01:46,880 Speaker 1: already in the process of moving into a lower gear, 34 00:01:47,920 --> 00:01:51,040 Speaker 1: does the market need to rethink the path of FED tightening. 35 00:01:51,080 --> 00:01:54,160 Speaker 1: Maybe they're not going to be as aggressive as we suspected. 36 00:01:55,760 --> 00:01:58,400 Speaker 1: We think, well, we hope, so I think the Feds 37 00:01:58,400 --> 00:02:01,360 Speaker 1: certainly once have a off landing, and if they're not 38 00:02:01,400 --> 00:02:04,960 Speaker 1: getting there and they actually cause a recession, although if 39 00:02:05,000 --> 00:02:07,120 Speaker 1: they're causing a recession is going to be short term, 40 00:02:07,160 --> 00:02:09,840 Speaker 1: but they you know, they're they're bound to. They're so 41 00:02:10,040 --> 00:02:14,359 Speaker 1: determined to reduce inflation that a short term recession may 42 00:02:14,400 --> 00:02:17,760 Speaker 1: be a good solution and could definitely slow down the FED, 43 00:02:18,280 --> 00:02:20,880 Speaker 1: you know, drive to increase interests with it, which would 44 00:02:20,880 --> 00:02:23,519 Speaker 1: be very good for the markets. We're certainly expecting a 45 00:02:23,600 --> 00:02:26,520 Speaker 1: seventy five business point next week from them. The question 46 00:02:26,680 --> 00:02:30,160 Speaker 1: is in September will we have seventy or fifty If 47 00:02:30,200 --> 00:02:32,839 Speaker 1: we have good inflation numbers. We have a pause here 48 00:02:32,880 --> 00:02:35,320 Speaker 1: in the next two months as far as FED meetings. 49 00:02:35,720 --> 00:02:38,280 Speaker 1: We have two inflation numbers before the FED meets again 50 00:02:38,400 --> 00:02:42,000 Speaker 1: when in August, one in September, and all indication is 51 00:02:42,080 --> 00:02:46,519 Speaker 1: we've had or prices go down for now. We've seen 52 00:02:46,720 --> 00:02:50,440 Speaker 1: we've seen housing interesting going up, housing sales and softwath 53 00:02:50,440 --> 00:02:53,160 Speaker 1: has come down. Later. We were talking a moment ago 54 00:02:53,200 --> 00:02:56,640 Speaker 1: about inflation repressius and how they may be easing, but 55 00:02:57,280 --> 00:03:01,000 Speaker 1: how short can we be about that? Because supply train pressures, 56 00:03:01,040 --> 00:03:03,840 Speaker 1: the war in Ukraine, the pressure on energy prices COVID, 57 00:03:04,200 --> 00:03:07,239 Speaker 1: none of it's gone away. Is there a chance that 58 00:03:07,360 --> 00:03:11,919 Speaker 1: we could see inflation come roaring back down the downland line? Yeah? 59 00:03:12,120 --> 00:03:17,400 Speaker 1: I mean the interest rates increases are certainly gonna reduce demand, 60 00:03:17,919 --> 00:03:20,720 Speaker 1: and that's really you know, the FED raising interest rates, 61 00:03:20,720 --> 00:03:23,400 Speaker 1: that's all they can do. They cannot influence supply, they 62 00:03:23,400 --> 00:03:26,600 Speaker 1: can influence demand. Certainly the demand for housing. Some of 63 00:03:27,080 --> 00:03:30,360 Speaker 1: the numbers lady on housing have certainly shown weakness. Uh, 64 00:03:30,440 --> 00:03:33,799 Speaker 1: there's a lot more houses for sale. Uh. And uh, 65 00:03:33,840 --> 00:03:37,520 Speaker 1: you know, almost a six percent mortgage rate here is 66 00:03:38,080 --> 00:03:41,560 Speaker 1: gonna reduce demand and that should bring down housing, which 67 00:03:41,600 --> 00:03:46,080 Speaker 1: is a big part of the economy. There is also, um, 68 00:03:46,320 --> 00:03:49,680 Speaker 1: you know, oil prices have gas prices have gone down 69 00:03:50,440 --> 00:03:53,120 Speaker 1: something like the last thirty days in a row. Uh. 70 00:03:53,320 --> 00:03:55,520 Speaker 1: We see here at the pumpbor in California. We've seen 71 00:03:55,600 --> 00:03:58,480 Speaker 1: definitely a decrease in the price of gas and that 72 00:03:58,560 --> 00:04:03,360 Speaker 1: should start translate eating in the cost what the cost 73 00:04:04,000 --> 00:04:07,240 Speaker 1: of the inflation in June was all about gas prices. 74 00:04:07,280 --> 00:04:10,240 Speaker 1: So if that's going down, it of course it's not 75 00:04:10,280 --> 00:04:13,640 Speaker 1: going to go down dramatically, but once you start trending down, 76 00:04:13,720 --> 00:04:15,600 Speaker 1: we need to see it trend. The last couple of months, 77 00:04:15,680 --> 00:04:18,680 Speaker 1: we've been surprised by actually having to go up the 78 00:04:18,680 --> 00:04:21,159 Speaker 1: CEP I go up instead of go down, and that 79 00:04:21,360 --> 00:04:24,960 Speaker 1: really spooked the markets and spooked the Fed and caused 80 00:04:24,960 --> 00:04:27,440 Speaker 1: the higher interest rate increase. So if we start seeing 81 00:04:27,440 --> 00:04:30,680 Speaker 1: a trend going down, that would be very welcome to 82 00:04:30,760 --> 00:04:33,240 Speaker 1: the Fed and to the markets. I was looking at 83 00:04:33,320 --> 00:04:36,720 Speaker 1: data today from the Oil Price Information Service, it indicated 84 00:04:36,800 --> 00:04:40,760 Speaker 1: nearly of US fuel stations this would be for gasoline 85 00:04:41,279 --> 00:04:44,600 Speaker 1: charging under four dollars a gallon for regular So it's 86 00:04:44,640 --> 00:04:47,359 Speaker 1: consistent with what you just laid out. There. Signs of 87 00:04:47,440 --> 00:04:49,400 Speaker 1: soft data here in the US in terms of the 88 00:04:49,440 --> 00:04:54,840 Speaker 1: macro may suggest that the Fed's path is a little 89 00:04:54,880 --> 00:04:57,520 Speaker 1: too aggressive. If that's the case and there is a 90 00:04:57,560 --> 00:04:59,560 Speaker 1: little bit more dollar weakness, do you want to have 91 00:05:00,040 --> 00:05:03,200 Speaker 1: more exposure to some offshore markets right now or do 92 00:05:03,240 --> 00:05:06,239 Speaker 1: you want to stick with the US. I I still 93 00:05:06,480 --> 00:05:08,920 Speaker 1: stick with the US. I do think that there's high 94 00:05:09,400 --> 00:05:13,040 Speaker 1: much higher likelihood to have recessions, certainly in Europe than 95 00:05:13,160 --> 00:05:15,200 Speaker 1: here in the US. I think we may be going 96 00:05:15,200 --> 00:05:17,240 Speaker 1: through a mild recession right now in the US, or 97 00:05:17,960 --> 00:05:21,360 Speaker 1: potentially if we do have one, to be very mild, unfortunately, 98 00:05:21,400 --> 00:05:25,039 Speaker 1: because we don't depend so much on the Russian gas, 99 00:05:25,160 --> 00:05:27,880 Speaker 1: so it's really is gonna depend on what happens with 100 00:05:28,120 --> 00:05:32,760 Speaker 1: the Russia Ukraine war, what happens to um Europe. So 101 00:05:33,200 --> 00:05:35,719 Speaker 1: we tend to stay right now, we're staying more focused 102 00:05:35,720 --> 00:05:39,720 Speaker 1: in the US. I know you also do like semi conductors, 103 00:05:39,800 --> 00:05:42,760 Speaker 1: defense stocks. Do you look offshore for some names there 104 00:05:44,960 --> 00:05:48,000 Speaker 1: not yet. We were sticking again with a little bit 105 00:05:48,080 --> 00:05:50,359 Speaker 1: in the semiconductor is a little bit of offshore, but 106 00:05:50,520 --> 00:05:54,080 Speaker 1: mostly still the US. Do you realize that the costs 107 00:05:54,680 --> 00:05:57,560 Speaker 1: of a car now it it comes, is the cost 108 00:05:57,560 --> 00:06:01,240 Speaker 1: of semiconductor. The cost of the car is a cost 109 00:06:01,240 --> 00:06:04,200 Speaker 1: of semiconductors. I mean, they go into everything right now, 110 00:06:04,279 --> 00:06:07,600 Speaker 1: and they're comparing to other tech socks are really undervalued. 111 00:06:08,480 --> 00:06:10,479 Speaker 1: Many of them are selling based on book value, and 112 00:06:10,520 --> 00:06:12,520 Speaker 1: they pay many of them pay dividends. So we really 113 00:06:12,560 --> 00:06:16,800 Speaker 1: like the semiconductor area. UM. We think that has more 114 00:06:16,839 --> 00:06:20,440 Speaker 1: potential if we wouldstand inflation pressures a lot more because 115 00:06:20,600 --> 00:06:26,680 Speaker 1: just to demand is there especially UM right now and 116 00:06:26,839 --> 00:06:31,280 Speaker 1: UH and UH enterprise and data center. And then we 117 00:06:31,320 --> 00:06:34,280 Speaker 1: certainly like financials. The net interest income, it's going to 118 00:06:34,360 --> 00:06:36,799 Speaker 1: be a huge They're going to be a huge beneficiary 119 00:06:36,800 --> 00:06:39,919 Speaker 1: of this interest rate increases they're making. They're gonna be 120 00:06:39,920 --> 00:06:43,400 Speaker 1: making tons of money on the net net interesting income, 121 00:06:43,480 --> 00:06:45,680 Speaker 1: something that have not done in a while. They don't 122 00:06:45,680 --> 00:06:48,520 Speaker 1: have to pay to get the posits anymore. There's a 123 00:06:48,520 --> 00:06:50,520 Speaker 1: lot of cash. I'm sure you've heard about the b 124 00:06:50,680 --> 00:06:53,039 Speaker 1: of A report. There's a lot of cash in the banks. 125 00:06:53,040 --> 00:06:56,240 Speaker 1: A lot of cash and investment accounts, and banks and 126 00:06:56,279 --> 00:06:58,719 Speaker 1: financials are going to make a huge amount of returns 127 00:06:58,720 --> 00:07:02,679 Speaker 1: on that. All right, later, we've got a few seconds lift. 128 00:07:03,080 --> 00:07:06,839 Speaker 1: Watch your number one fear at the moment. Number one 129 00:07:06,839 --> 00:07:11,680 Speaker 1: fear is the earnings. The earnings if they disappoint or 130 00:07:11,720 --> 00:07:14,360 Speaker 1: if the guidance and all of these companies the next 131 00:07:14,400 --> 00:07:18,760 Speaker 1: few weeks there's a lot worse than expected. Um. That 132 00:07:19,040 --> 00:07:21,360 Speaker 1: is really the big fear right now. And the other few, 133 00:07:21,360 --> 00:07:24,920 Speaker 1: of course, is that somehow inflation or the war is 134 00:07:24,960 --> 00:07:30,640 Speaker 1: extended or gets increased, and that could really row the markets. Alright, 135 00:07:30,720 --> 00:07:33,400 Speaker 1: Layla Pan's president of Pens Wealth Management, thanks so much 136 00:07:33,440 --> 00:07:35,400 Speaker 1: for joining us on Bloomberg Day. Breacasia