JACK: BANK STOCKS GOT ROCKED
AND INVESTORS LOOKING TO THE
FED FOR WHERE INTEREST RATES
ARE HEADED.
THE HEAD OF US EQUITY STRATEGY
LORI CALVASINA IS HERE WITH
WHAT TO EXPECT.
WILL THE FED RAISE RATES THIS
COMING WEEK?
WHAT DO INVESTORS WANT TO HEAR?
>> OUR ECONOMIST PUT IT WILL
HANG SAID IT WAS A GAMETIME
DECISION.
HE CAN SEE THEM DOING 25 AND IF
THINGS CONTINUE TO BE VOLATILE
THEY MIGHT DECIDE TO TAKE A
PAUSE AND DOESN’T SEEM LIKE THERE’S A LOT OF FINANCIAL
THERE’S A LOT OF FINANCIAL
MEETING BUT QUITE A FEW DAYS.
JACK: IF THE FED, IS THAT
INEVITABLE NOW.
>> THEY DIDN’T COME DOWN
ENOUGH, WE HAVEN’T SEEN THE
PEAK OF INFLATION PAST DOWNWARD
BUT THE WORK THE FED HAS DONE
WILL TAKE TIME AND FILTER INTO
THE SYSTEM BUT THAT MEDICINE IS IN THE PROCESS OF BLOWING
IN THE PROCESS OF BLOWING
THROUGH THE ECONOMY’S BANKS.
JACK OTTER:
JACK HOUGH: WHAT IS REASONABLE
EXCITATION FOR RETURN FOR
INVESTORS?
>> VALUATIONS DON’T LOOK BAD.
THEY DON’T LOOK FANTASTIC.
THERE IS A LOT OF UNCERTAINTY
WHERE THINGS WILL END UP BUT
EVEN ON MY BELOW CONSENSUS
NUMBERS WE ARE PRETTY
REASONABLE FOR THIS YEAR.
JACK HOUGH: FAR BELOW?
>> I MEANT 199.
EVEN --
JACK HOUGH: THAT A BIG
DIFFERENCE.
>> WE DON’T LOOK FANTASTIC BUT
WE LOOK OKAY.
JACK HOUGH: DOES THAT
ANTICIPATE A RECESSION?
SOUND LIKE A BIG DIFFERENCE.
>> IF YOU LOOK AT STOCK MARKET
PRICING IN OCTOBER, IT BAKED IN
A MILD SHORT SHALLOW RECESSION
THAT TAKES PLACE IN 2023.
THE THINGS THAT TAKES
VALUATIONS LOWER, THIS IS THE
RISK, IF YOU SEE A RECESSION IN
2,024 THAT HASN’T BEEN PRICED
YET.
JACK HOUGH: ARE THEIR PART OF
THE STOCK MARKET THAT ARE MORE
VULNERABLE THAN OTHERS, TO
MISSING EARNINGS IN A
ROUNDABOUT WAY OF SAYING WHAT
WOULD BE YOUR FAVORITE SECTORS
TO INVEST IN?
>> THE TECH SPACE IS REALLY
INTERESTING.
WE CAN OVERRATE THAT SECTOR
BECAUSE WE WANT TO KEEP OUR
TOES IN THE GROWTH TRADE.
THEY GOT THE RISKED LAST YEAR.
THE VALUE SECTOR, THINGS LIKE
ENERGY, FINANCIALS, BEFORE
BANKS BLOW UP, THOSE ARE THE
LAST DOMINOES, EXPECTATIONS
WERE RESILIENT AND THEY’VE GOT
TO BAKE IN SOME PAIN.
JACK HOUGH: WHAT ABOUT BANKS?
>> WE DIDN’T ANTICIPATE WHAT
UNFOLDED OVER THE PAST WEEK.
THE BANK TEAM THINKS THIS IS A
CONTAINED IMPLOSION.
WE WILL WAIT AND DO SEE.
IF YOU ARE A LONGER TERM
INVESTOR, WHENEVER YOU HAVE BIG
DISLOCATIONS LIKE THIS THERE
ARE ALWAYS OPPORTUNITIES.
A SHORT-TERM INVESTOR WILL NEED
SOMETHING ELSE.
JACK HOUGH: WHAT DO YOU THINK
ABOUT LARGE CAPS?
>> IN THE SHORT-TERM, LARGE
CAPS HAVE THE ADVANTAGE BECAUSE
THEY ARE BIASED TOWARDS
DEFENSIVE END GROWTH SECTORS
LIKE TECHNOLOGY, FINANCIALS ARE
BEING A DRAG ON THE SMALL-CAP
SPACE.
SMALL CAPS ARE MORE CYCLICAL.
WE HAVE THE FEARS AND RISK
MOVEMENT, IT’S A TOUGH PLACE TO
BE BUT VALUATIONS LOOK
FANTASTIC.
IF WE KEEP THAT 2,024 RECOVERY
THESIS ON THE ECONOMY INTACT,
WE NEED TO ADD TO SOME.
JACK: LAYOFFS ARE CREEPING UP.
ARE YOU CONCERNED ABOUT THE
EFFECT ON THE ECONOMY?
>> I’M COMFORTED BY THE
AFFECTED INDUSTRIAL LAYOFFS ARE
NONEXISTENT, INDUSTRIALS DID
MOST OF THEIR LAYOFFS AROUND
THE PANDEMIC AS MUCH AS WE SAW
IN THE GF THE ANTI-TECH LEVEL,
THAT GIVES THE ECONOMY SOME
RESILIENCE.
OUTSIDE THAT, WE SEE AREAS LIKE
MEDIA, FINANCIAL, HEALTHCARE,
CONSUMER-PRODUCTS PICKUP.
BEFORE THE BANK ISSUE, SIBLEY
BECAUSE WE ARE SEEING THE LABOR
MARKET DETERIORATE.
THAT’S BETTER NEWS FOR INVESTORS GETTING STARTED
INVESTORS GETTING STARTED
SOONER RATHER THAN LATER.
JACK HOUGH: DO YOU SEE ANY
MISTAKES INVESTORS ARE MAKING?
>> THERE’S A BIG ROTATION INTO
GROWTH THIS WEEK.
THAT MAKES SENSE GIVEN WHAT HAS
HAPPENED WITH INTEREST RATE
EXPECTATIONS BUT INDUSTRIALS
HAVE BEEN GETTING HIT HARD.