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Speaker 1: And let's get to our guests, Layla Pence, President of

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Speaker 1: Pence Wealth Management. Layla, We've been trumpeting this a little

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Speaker 1: bit this morning. Ned Davis Research says chance of recession

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Speaker 1: and Morgan Stanley's Lisa Shalott is warning earnings optimists you're

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Speaker 1: sleep walking off a cliff. Yet I get the feeling

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Speaker 1: from looking at your notes that you'd be nibbling here,

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Speaker 1: you'd be doing some buying here because you know, the

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Speaker 1: bear market will end at some point, right, you know,

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Speaker 1: no one rings a bell and tells you this is

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Speaker 1: the bottom of the market or this is the time

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Speaker 1: to buy. You know, I've been doing this a long

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Speaker 1: time and I've been waiting for the bell, but it

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Speaker 1: just doesn't come. So you mean the Fed doesn't hold

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Speaker 1: up a sign and say it's okay to dip your

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Speaker 1: toe in the water. Now. No, it doesn't do that.

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Speaker 1: That is that is the issue. And so you really

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Speaker 1: have to look. This is where you know stock by

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Speaker 1: stock uh analysis needs to come in and he really

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Speaker 1: what makes sense? What and you just nibble? And you

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Speaker 1: know what we do is, you know, if we want

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Speaker 1: to have a two percent position, when we go in

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Speaker 1: there into a half percent position, but yeah, evaluations have

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Speaker 1: gone down um so much, and a lot of the

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Speaker 1: different paying stocks are now yielding so much more because

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Speaker 1: the price of the stock has gone down, so it's

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Speaker 1: becoming attractive. I remember doing this back in two thousand

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Speaker 1: and eight, two thousand nine, you know, in September fifteen,

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Speaker 1: so all the way to marsh nine. You know, the

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Speaker 1: market was horrendous, way more than it is right now,

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Speaker 1: and uh, things look very bleak, but you know, the

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Speaker 1: returns different pay stocks, and some of the stocks really

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Speaker 1: became attractive. You can't go in all the you know, percent,

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Speaker 1: but you certainly could nibble on some areas that are

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Speaker 1: going to benefit from inflation. They're still going down regardless

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Speaker 1: of the fact that they actually are benefactor of inflation.

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Speaker 1: But when the market sells off, they sell off everything.

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Speaker 1: So there's areas like payments. We really like payments, you know,

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Speaker 1: in credit cards, and we think that that's an area

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Speaker 1: since things are costing more and the consumers still holding

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Speaker 1: up because they still have money and they're still working.

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Speaker 1: So every time a charge is made on those credit cards,

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Speaker 1: these companies are making more money and the cost of

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Speaker 1: labor for them is much smaller than other companies, So

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Speaker 1: we think that could be a benefactor. Plus they have

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Speaker 1: then an interesting income. They still have cash on their

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Speaker 1: balance that they actually make money. And of course they

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Speaker 1: least they rented out or they lended up for higher

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Speaker 1: interest in with with the cost them. So so it

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Speaker 1: gives a sense. Also, you know what, what do you

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Speaker 1: absolutely don't touch at all? What I don't touch, well,

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Speaker 1: I don't I don't touch really high multiple stocks, I

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Speaker 1: don't touch. Believe it or not. We're um, we're staying

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Speaker 1: away from uh um things that right now a little

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Speaker 1: bit out of energy because you know, price of oil

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Speaker 1: is definitely is certainly starting to come down and if

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Speaker 1: we are going to have a minor recession, that's not

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Speaker 1: an area right this minute. Now. We liked it in

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Speaker 1: the past, and we may like it again. They pay

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Speaker 1: good dividends and but high multiple earning stocks those are

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Speaker 1: the ones that hi pe stocks. The thing is the moment.

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Speaker 1: If you stay in cash, you're cash are gonna be

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Speaker 1: eroded by inflation. If you go into these markets as

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Speaker 1: they are right now, they're going to be eroded by

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Speaker 1: the markets. What do you do? Well, you know, the

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Speaker 1: two year notes are certainly very attractive today, where you

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Speaker 1: can get you know, if you hold it to mature,

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Speaker 1: even though potentially interest it will still rise in the

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Speaker 1: short term. But you can get a two year note

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Speaker 1: today at four point to five almost, so for the

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Speaker 1: very first time and a long time since two thousand

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Speaker 1: and seven, you're actually are getting a return on fixed income,

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Speaker 1: so you don't have to just keep it in cash.

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Speaker 1: But even some of the money markets are playing to

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Speaker 1: an a half percent and higher, so there is a

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Speaker 1: yield for the very first time, and yes, it will

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Speaker 1: be avoided by inflation if you leave it there for

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Speaker 1: a long time. It's really more a little bit of

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Speaker 1: your allocation to have it in a parking place, but

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Speaker 1: certainly not long term. Cash is not a long term investment. Yeah,

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Speaker 1: if you wait back into the markets, who are talking

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Speaker 1: about trying to figure out when the valuation becomes, you know,

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Speaker 1: sort of appealing. Um talking about a payment processor with

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Speaker 1: a big name. It may not be one on your list,

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Speaker 1: but PayPal it was over three dollars and it's now

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Speaker 1: at eighty four, and yet the forward pe is still

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Speaker 1: twenty one and the trailing thirty. So is it still

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Speaker 1: too expensive when you look at something like that, Yes,

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Speaker 1: I can't comment on specific name, but there's certainly some

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Speaker 1: some holdings any payment plan in the payment area that

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Speaker 1: are still have hYP and don't warn it, but there's

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Speaker 1: many others that do. And maybe in ets might be

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Speaker 1: a better way to play this market. So you're going

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Speaker 1: to have that diversification of many of them. But the

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Speaker 1: concept it self, the idea that they are really a

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Speaker 1: good inflation head is definitely there because consumer are still

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Speaker 1: spending and they're going to spend more money and so

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Speaker 1: without doing much they're going to earn more. So we

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Speaker 1: do like that area. And of course the defense lata

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Speaker 1: are we seeing QT now making itself felt i e.

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Speaker 1: A draining of liquidity in the system and that's perhaps

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Speaker 1: really making fundamentals worse in some ways, and the increasing

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Speaker 1: fear out there, and that's why we're seeing real rates up.

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Speaker 1: You know, there's still a lot of liquidity in the market.

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Speaker 1: I mean, the set put in five point six trillion dollars,

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Speaker 1: you know, and this is what we have inflation there.

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Speaker 1: It is because all that liquidity, there's a lot of

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Speaker 1: money in the money market. But I do think probably

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Speaker 1: you know, it's kind of that hidden you know QUT

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Speaker 1: reduction that may be hitting the market. No one has

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Speaker 1: really come and said that yet, but I'm sure it's

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Speaker 1: going to start hitting it sooner or later. But the

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Speaker 1: yields are really going up because the Federal Reserve kind

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Speaker 1: of came out, as you know, and said, hey, we're

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Speaker 1: going to go to four point six by next year,

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Speaker 1: and the market immediately wants to get there before the

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Speaker 1: Fed actually gets there. That's anticipated in the market. So

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Speaker 1: really market hits surprises. And the September thirteen inflation number

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Speaker 1: CPO number really was a surprise, even though it's just

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Speaker 1: a small increase. But when you're expecting a lower inflation,

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Speaker 1: you get even a small take of higher inflation. Really

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Speaker 1: is why we have where we're at today is the

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Speaker 1: surprise on the downside of the market. Um didn't come

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Speaker 1: there from inflation. Okay, So you talked about the two

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Speaker 1: year at the moment yielding four point three or four percent,

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Speaker 1: which looks pretty attractive. You talked about payment processors and defense,

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Speaker 1: and one other area you like is dividend paying companies.

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Speaker 1: Do you find that that those are not too expensive

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Speaker 1: and are you talking about companies especially in the utilities

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Speaker 1: area or staples or where well, it's amazing because you

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Speaker 1: have chet they're gonna pay check today. That's actually yielding

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Speaker 1: because it's it's been one of the areas you know

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Speaker 1: with the Nazack heading. You know now no more, uh,

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Speaker 1: that is actually starting to have a yield. H. So

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Speaker 1: you're able to, you know, if you have the stomach

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Speaker 1: to hold, you know, to live with this. All told

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Speaker 1: you that you're able to nibble into these companies and

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Speaker 1: get some different pains while you wait and if the

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Speaker 1: fundamentals are there, I mean, like you know, the one

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Speaker 1: thing you said which I want to repeat at the beginning,

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Speaker 1: is that bear markets do end times like this. People,

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Speaker 1: when when you see the market go down day after

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Speaker 1: day after day, you really think this is what's going

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Speaker 1: to be forever. This is what we call adaptive expectation.

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Speaker 1: People think whatever is happening now is what's going to

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Speaker 1: happen in the future, and of course it's up Layla.

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Speaker 1: Thank you so much for joining is sir Lala Pence,

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Speaker 1: a president of Pence Wealth Management with her take on

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Speaker 1: the market. Thanks very much. Indeed,