WEBVTT - Markets Managing Confusion Courtesy of the Fed

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<v Speaker 1>It was another wicked week full of twist and turns

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<v Speaker 1>of the financial markets, a bite of flow bank headlines,

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<v Speaker 1>and of course, as you know, more today. So let's

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<v Speaker 1>get a look at the week that was, thoughts as

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<v Speaker 1>we head into the weekend with us right now, as

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<v Speaker 1>Nancy Tangler, CEO and chief investment officer at Laffert Tangler Investments,

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<v Speaker 1>and she joins us via zoom from Scottsdale, Arizona. Nancy

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<v Speaker 1>Jess was like, we gotta talk to her, We gotta

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<v Speaker 1>talk to you, We gotta talk to Nancy. So we're

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<v Speaker 1>glad to have you wrap up the week that was.

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<v Speaker 1>As we are sitting here on this Friday, an hour

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<v Speaker 1>after the market closed, or an hour and a half

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<v Speaker 1>after the market close, what is top of mind for you? Well,

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<v Speaker 1>thanks so much, Carol and Jess, thanks for suggesting me.

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<v Speaker 1>I think that what I'm concerned about is not the

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<v Speaker 1>banking system, but the lack of regulatory supervision and continuity

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<v Speaker 1>of messaging. I think Janet Yellen really sort of stepped

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<v Speaker 1>in it yesterday when she sort of walked back that

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<v Speaker 1>all deposits are guaranteed and we're not considering that while

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<v Speaker 1>Powell is saying exactly the opposite that kind of confusion.

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<v Speaker 1>The market did seem to finally shake off end of day,

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<v Speaker 1>but it's a little bit troubling, and I think something

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<v Speaker 1>that we're really watching. I also thought the presser was

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<v Speaker 1>not Powell's best I know there's a lot of people

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<v Speaker 1>that disagree with me, but there was a lot of

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<v Speaker 1>I don't knows, and a real lack of willingness to

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<v Speaker 1>sort of engage on the question of fiscal policy, which

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<v Speaker 1>we think has clearly driven inflation or at least fanned

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<v Speaker 1>the flames. So we're watching all of those things. But generally,

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<v Speaker 1>we've been pretty optimistic since the fourth quarter when we

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<v Speaker 1>began adding to our technology holdings and really adding risk

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<v Speaker 1>back in, and that has really been a good decision

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<v Speaker 1>in the near term and we hope a good decision

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<v Speaker 1>for the long term. So if you feel that way,

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<v Speaker 1>how did you feel about the Financial Stability Oversight Council

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<v Speaker 1>coming out and after a meeting the Treasury Secretary Janet Yellen. J.

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<v Speaker 1>Powell was there as well as some other regulators, financial

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<v Speaker 1>banking regulators here in the US, and they came out

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<v Speaker 1>and said US banking system remains dound and resilient, and

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<v Speaker 1>that the Council discussed efforts to monitor financial developments. Our

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<v Speaker 1>Craig Touris says it felt kind of flat. How do

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<v Speaker 1>you feel for them to have an unscheduled meeting today

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<v Speaker 1>and that's what they come out. Well, I think what

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<v Speaker 1>we've learned from this regime of regulators is that and

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<v Speaker 1>FED participants is that what they say is not necessarily

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<v Speaker 1>what they mean. And by that I mean Chair Powell.

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<v Speaker 1>I mean, I hope I'm wrong, but I think he

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<v Speaker 1>goes down as one of the worst Federal Reserve chairman

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<v Speaker 1>in our history. And the reason I say, yeah, he's

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<v Speaker 1>been ethically wrong at every turning point and then doesn't

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<v Speaker 1>seem to acknowledge those mistakes and just kind of continues

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<v Speaker 1>along making statements. So that's why I'm troubled, because I

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<v Speaker 1>don't know you can believe from what they say. I mean,

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<v Speaker 1>if you look at the two year yield, the two

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<v Speaker 1>year yield has led on the way up the FED,

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<v Speaker 1>as it always does, by the way, and it's leading

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<v Speaker 1>on the way down while the Feds still repeating rhetoric

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<v Speaker 1>that I don't think they're going to be able to

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<v Speaker 1>deliver on. And that's been the case all the way through. Remember,

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<v Speaker 1>we're not even thinking about thinking about raising rates, and

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<v Speaker 1>the rate hike came almost on the heels of that

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<v Speaker 1>we won't go seventy five, and a week later we

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<v Speaker 1>went seventy five. Two weeks ago, he said, you know,

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<v Speaker 1>we're at fifty basis points. We think, you know, higher

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<v Speaker 1>for longer, And that turned out to really be the

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<v Speaker 1>final straw on the camel's back. I mean, not taking

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<v Speaker 1>away the fact that SPB was, you know, notoriously wrong

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<v Speaker 1>about their asset liability match, but I just think he

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<v Speaker 1>has a credibility problem, and the market is if you

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<v Speaker 1>look at risk assets, the market seems to not be

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<v Speaker 1>listening anymore. And because you brought up PAL, I have

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<v Speaker 1>to ask, what about Janet Yellen? How are you feeling

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<v Speaker 1>about her so far this week? Yeah, I think I

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<v Speaker 1>think she's made an you know, she stepped in it basically, Yes,

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<v Speaker 1>I mean she she contradicted herself within two days, and

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<v Speaker 1>that that isn't and and seems to be very political,

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<v Speaker 1>as I would argue, so does Pale to some extent.

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<v Speaker 1>And so that's a worry too, because you know, we

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<v Speaker 1>really want I mean, Yellen isn't a political and appointee,

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<v Speaker 1>So I don't fault her for that, but she just

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<v Speaker 1>doesn't come across as leading. She comes across as as

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<v Speaker 1>reading from a page, and that that I think the

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<v Speaker 1>really troubled to market yesterday and we saw that in

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<v Speaker 1>in the mid day. I do feel like this mirror

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<v Speaker 1>is what we talked about with Chris Whalen earlier in

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<v Speaker 1>terms of I mean, he's his feeling is the FED

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<v Speaker 1>needs to be cutting rates at this point, that the

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<v Speaker 1>exposure potentially of banks when it comes to the move

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<v Speaker 1>up that we've seen in just one year, and potentially

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<v Speaker 1>the impact it could have on more banks. What what what

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<v Speaker 1>would you say we need to all be as investors

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<v Speaker 1>focusing on right now, Nancy, Well, we know the economy.

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<v Speaker 1>By the way, I agree with that. I think they

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<v Speaker 1>should have paused at the last meeting they you know,

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<v Speaker 1>he has also said that there is not a lagged

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<v Speaker 1>effect on monetary policy and that monetary supply and the

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<v Speaker 1>growth of the monetary supply has no impact on inflation.

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<v Speaker 1>So there's a lot I disagree with him on. But

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<v Speaker 1>I think we know that the economy is slowing, and

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<v Speaker 1>in that environment, you really want to be focused on

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<v Speaker 1>companies that can deliver earnings growth, and I think that

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<v Speaker 1>is why investors have I mean, that was why we

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<v Speaker 1>returned to technology in the fourth quarter. I mean, we

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<v Speaker 1>had holdings, but we added to them because that's that's

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<v Speaker 1>where I want to be positioned in a slowing economic environment.

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<v Speaker 1>And then it really matters which companies you own. And

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<v Speaker 1>as an illustration of that, just just consider the performance

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<v Speaker 1>of Nvidia versus Intel. You know, on the surface, both

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<v Speaker 1>semiconductor companies, very different baseline business, very different management teams,

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<v Speaker 1>and so we're looking for the kind of companies that

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<v Speaker 1>can have proven they can navigate through a slowing economy.

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<v Speaker 1>And we're not adding to banks. In here. We were

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<v Speaker 1>underweight the industry within the financial sector, and we remained

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<v Speaker 1>so and have been adding to other names like American

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<v Speaker 1>Express and Chubb Insurance. Have you been buying technology again still,

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<v Speaker 1>because we've certainly seen some of the fang names. I

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<v Speaker 1>don't know if you can call them fang names anymore

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<v Speaker 1>because they've changed their names, but I mean, have you

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<v Speaker 1>been buying because that's one of the things that I

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<v Speaker 1>highlighted that we've really seen a kick up in a

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<v Speaker 1>couple of these names in the last few weeks. Yeah,

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<v Speaker 1>well so, Carol, we were buying in the fourth quarter,

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<v Speaker 1>and I actually sold some right before the FED, before

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<v Speaker 1>the press press conference, and just trimmed back because we

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<v Speaker 1>were we were overweight of what our target was for

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<v Speaker 1>the individual stocks. But we still hold them enthusiastically. And

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<v Speaker 1>that by thang, I mean we don't own Meta, but

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<v Speaker 1>you know that consumer I'm sorry, communication services, but we

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<v Speaker 1>do own. Our theme is really around old economy companies

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<v Speaker 1>that are embracing the digital revolution, and the digital economy

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<v Speaker 1>is now ten and a half percent of GDP and growing,

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<v Speaker 1>and the companies that supply the digital solutions. So we

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<v Speaker 1>like names like Service Now that's one of our largest holdings,

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<v Speaker 1>Palo out A network, Broadcom which is an AI, and

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<v Speaker 1>enterprise cloud Play, and I can't even remember that other names.

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<v Speaker 1>It's kind of it's okay, it's been that kind of

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<v Speaker 1>a day, a week, two weeks. Yeah, I really want

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<v Speaker 1>to know, Nancy, because obviously this is a million dollar

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<v Speaker 1>question when it comes to capitulation, whether or not we

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<v Speaker 1>bottom so far. But when you're looking at the SMP

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<v Speaker 1>five hundred up one more than one percent this week,

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<v Speaker 1>the NASAC one hundred up about two percent, but yet

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<v Speaker 1>there's still a lot of negative sentiment out up with that.

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<v Speaker 1>What is going on? Break this down for us? And

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<v Speaker 1>do we need to see more of an inflection point

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<v Speaker 1>happen here in the equity markets. Yeah, so we really

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<v Speaker 1>haven't seen what would be classically defined as capitulation Jess,

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<v Speaker 1>But we but we are at record barishness kind of metrics.

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<v Speaker 1>If you look at the AAII or the fear Greed

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<v Speaker 1>Index UM, individual investors are very negative and institutional investors

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<v Speaker 1>are also very negative. That is usually a great time

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<v Speaker 1>to be buying stocks because they you know that it's

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<v Speaker 1>the contrary indicator, uh, that that really is very consistently

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<v Speaker 1>pointing you in the right direction by having the wrong view.

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<v Speaker 1>And so when when sentiment gets this bad, that that

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<v Speaker 1>is a time when when brave investors should step in

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<v Speaker 1>because it's usually followed by periods about performance. So I

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<v Speaker 1>think what you're seeing is just, you know, the same

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<v Speaker 1>thing that we've been talking about, inconsistent policies. UM. You know,

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<v Speaker 1>the the U of MISS survey was was pretty negative.

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<v Speaker 1>But then of course you know inflation um expectations are

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<v Speaker 1>still grounded. People are seeing improvements in their real purchasing

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<v Speaker 1>power because wages have gone up and inflation is coming down,

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<v Speaker 1>but there are still a lot of variables that have

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<v Speaker 1>people disturbed and uncomfortable, and I think that always affects

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<v Speaker 1>the investing. You desire to get in and buy stocks.

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<v Speaker 1>It's the best time to do it, however, Well, Warren

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<v Speaker 1>Buffett would agree with you, probably as well. Nancy Tangler,

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<v Speaker 1>thank you so much, Chief investment officer at Laffard Tangler Investments,

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<v Speaker 1>joining us via zoom from Scottsdale, Arizona. Really appreciate you

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<v Speaker 1>weighing in there.