Transcript: Caroline WoodsJoining me now, Nancy Tengler is CEO and CEO at Laffer Tengler Investments. Nancy, great to have you back at the desk.

Nancy TenglerI know, so good to be here, Caroline.

Caroline WoodsSo, Nancy, you called a bottom earlier this month and you were buying into it. How confident are you that you were right and how much upside is still in store?

Nancy TenglerWell, it depends on the time frame, but I would say we’re very confident that we were right. You saw the market go down for 42 straight days and then it’s recovered everything. Just about since we called it in about 11 or 12 days. Now, today’s a little volatile. We get. Yes. You know that that will continue because that’s how markets work.

Nancy TenglerBut we think the narrative is there. Stocks ultimately trade on earnings. And earnings growth is expected to be, you know somewhere around 20% this year. And a vast majority of that is driven by technology earnings.

Caroline WoodsSo what is it that needs to happen for stocks to continue to move higher?

Nancy TenglerI think companies just need to continue to meet or beat estimates and raise guidance. And so what we’ve seen is the companies that haven’t done that so far this season have been punished pretty severely. But generally speaking, the news has been very good. And I think this week will be the big tell with all the hyperscalers reporting. But yeah.

Caroline WoodsIt’s a big it’s a Super Bowl actually for big tech earnings which they’ve had a huge run heading into this quarter. So the bar is is pretty high. I think that even with a beat and raise that there could be some disappointment there. What are you expecting?

Nancy TenglerYeah, I do think there can be disappointment. I think that’s in the near term. The markets are really dominated by the algorithms. And then the hedge funds jump in and increase the volatility. But over time and I’m talking I’m not talking ten years, I’m talking you know, months. And then our investment horizon is 3 to 5 years. We expect to see these names continue to be among the top performers.

Nancy TenglerNow that doesn’t mean we’re all tech all the time. We’re overweight industrials, consumer discretionary and financials though not really focused on banks. But that that is a cyclical pro economic growth kind of a trade. And we think that’s going to continue. You no stagflation in in our horizon.

Caroline WoodsI want to get into your playbook in just a second. But first let’s stick with big tech earnings because that is really the highlight of this week. Are there any that you think are poised to really outperform any that are already kind of stretched heading into the reports?

Nancy TenglerYeah, I think, well, I think any good news from Microsoft would, would be, beneficial to the stock price, but I don’t know that we’re going to get that yet. So we’re still holders. We added to it recently. I think my favorite among, the hyperscalers or the Mach seven, whatever you want to refer to is Amazon.

Nancy TenglerIt’s been underestimated. Had a nice run, broke through resistance. But importantly, the fundamentals are there. You’ve got a great CEO, who is now hitting his stride. You’ve got AWS, got advertising. You have their chip business training in which they just signed a joint venture with OpenAI, I believe. So there is a lot to like about the underlying company, not to mention the the consumer business.

Nancy TenglerSo it’s it’s in our 12 Best Ideas portfolio. It’s, you know, it’s in our across all of our strategies, one of the largest.

Caroline WoodsBut you already got in an Amazon is up more than 25% this month alone. Is it too late to get in or you’d be a buyer here?

Nancy TenglerSo I always talk about I’d still be buying. I always talk about that. The performance of that stock since its IPO, it’s up 175,000%, give or take. When was it too late to get in? Yeah. This is a great growth company that continues to adapt and pivot to new technologies. It’s a it’s really a stellar management team.

Nancy TenglerSo I always use a weakness in this stock. And many of the names in the Mac seven to add to holdings, because that’s the long term narrative is still intact.

Caroline WoodsYeah. Is there a name that’s had a really impressive run that you do think it’s too late to get in?

Nancy TenglerYeah. We’ve been trimming lam it’s the largest holding in our ETF for JLR. We’ve been trimming it. We’re not selling it, but we’re pulling back some of our holdings. We just trimmed Teradyne rocket Labs. I’m sorry, we just added to Rock, but Planet Labs was one that we trimmed back on. So there are times when you need to do that.

Nancy TenglerWe’ve done that with Apple over the last almost 15 years and we’ve done it with a Broadcom. So it’s a question of do you still want to hold it. And there are names that we have exited to be sure. But mostly they’re marginal trims because our time horizon is pretty long.

Caroline WoodsYou mentioned your ETF. It’s actually outperforming the S&P 500. What are you seeing that the market might still be missing.

Nancy TenglerI think we’re looking forward. So you know calling the bottom. If we didn’t act on it wouldn’t have been helpful. We did trim in that ETF. We trimmed our energy holdings by 20% last month when I was here with you. And we added, to Microsoft in housing and housing is has dramatically outperformed. That’s what you have to do in turning points.

Nancy TenglerBut we have a market that tends to be, a follower market. So read the headlines. Do what just happened. We don’t do that okay.

Caroline WoodsSo let’s dig more into your playbook. You’d be buying Amazon here. You said where else would you be putting money to work right here, right now.

Nancy TenglerEven after the recent, increase in, in earnings and therefore performance, we, we would be adding to GE Ivanova on any pullback. It’s in every single one of our strategies. We like the company. We like the name. We love the backlog. We would be adding to Well we recently added to housing as I mentioned, we added to Tesla recently, Palantir, a number of the software names on the weakness, that was generated by AI is going to eat software.

Nancy TenglerThat narrative, we think there will be winners. And the names that I just mentioned are among the winners.

Caroline WoodsIs that why you think Tesla’s down and lagging because of the AI disruption fears?

Nancy TenglerOkay, no, I just think it’s a stock that that investors love to hate and love to love. So you get these big moves like we bought it during deep sleep, which was just a little over a year ago at 240 a share. We initiated our position just three years ago at $100 a share. So you can you can see a lot of move up.

Nancy TenglerAfter the 240 purchase. It went up to 450 or so and now it’s back down to 350. I’m still pretty content. It is for us, this stock you kind of have to own for the next ten years. It’s I it’s the space potential merger. It’s, it’s full self-driving. It’s the battery storage business, and ultimately, it’s Optimus, the humanoid robot.

Caroline WoodsIf I gave you money today, what’s the first stock you would buy?

Nancy TenglerOh, that’s a hard one. I’m a portfolio manager. I always have to name three. I’d probably be adding to Tesla. Yeah, or Palantir. Either one of those.

Caroline WoodsBut make the case a bit more for Tesla, because even when it beats, it hasn’t been that loved. Yeah, it’s lagging in a market that tech is really dominating again right now. So why would I want to own that?

Nancy TenglerAnd Caroline, the great irony is they beat on EV sales this last quarter beat on earnings and the market went, I think we’re waiting for what happens with SpaceX. We believe that will be a catalyst. I think.

Caroline WoodsA catalyst for Tesla.

Nancy TenglerThough. Absolutely. Yeah. I think what you know, one of the things that we were all talking about not that long ago was Elon Musk‘s pay package. The way he gets there is by putting the companies together, in my view. So I think you’ll see the companies get put together and SpaceX, there will be a lot of enthusiasm and I think there will be spillover into into Tesla.

Caroline WoodsWhat’s one position that you’ve added to recently that might actually surprise some of our viewers?

Nancy TenglerI think Dr. Horton, and the reason we did that is because we’re looking ahead and we think that this president knows he has to solve the housing logjam. There has to be some sort of an incentive. They’ve tried, they haven’t gotten very far. So Kevin Warsh being, confirmed this week will be a good step in the right direction, but I think housing is going to be the sleeper surprise.

Nancy TenglerIt was in our six for 26 portfolio that we announced on January 1st.

Caroline WoodsWe also have a fed meeting this week. Yeah. Do fed meetings even matter for the overall market really in terms of the direction or is this a market that no longer is policy driven?

Nancy TenglerI think you might be it might be the latter. I think you might be right in that regard, especially this meeting where we’re going to have a hand off pretty soon. I do think the market will the bond market will try to test Kevin Warsh. That always happens. But I think for, for the overall stock market, you know, the fed has cut rates, significantly.

Nancy TenglerAnd the, the ten years in a little range, it’s range bound. So the market is not necessarily agreeing with the Fed’s movements. We’ll see if that changes.

Caroline WoodsWhat’s the biggest risk to your bullish view. What would make you change your mind. That this is a market that you know you might not be as constructive.

Nancy TenglerAnd I think when it will ultimately happen. And I think what we’ll be looking for is, a slowdown in earnings growth and movement, possibly to negative. These are pretty lofty numbers that we have to sustain year over year. Margins are at a historic high. What if we start to see margins contract. What could drive that. Will inflation energy.

Nancy TenglerIf this if this war in the Middle East continues much, much longer, I think you’ll start to see the, the ramifications throughout the economy. That said, you know, if we lived in an isolated world, the U.S. is fine. I mean, we’re the marginal net producer. Our costs are much lower. Energy costs are 1.5% of the average consumer’s budget.

Nancy TenglerBut but but there will be a trickle through. And that’s one of the things that we’ll be watching. And then way out there, the debt, like at some point we have to contend with that.

Caroline WoodsOkay. And then just quickly, in the near term, especially for big tech earnings this week, what is it that you’ll actually be paying attention to on these calls? Is it I on implementation margins? What specifically is.

Nancy TenglerI think it’s all of that, but it’s also monetization of AI. So last year what last quarter Microsoft got dinged because they were capacity constrained. That may still be a problem for some time. So we want to hear about CapEx, but we want to also hear about production from the CapEx. How fast is Azure growing, for example, with with Microsoft.

Caroline WoodsSo for anyone sitting on the sidelines right now that maybe thought we were going to see a bigger pullback, a better entry point, what’s your best advice to them in terms of what they should do at this moment?

Nancy TenglerIt’s time in the market not timing the market. And when you look back historically, if you missed the five best days over a 30 year period, it was the difference between investing $1 million and having 13.5 million by staying invested, or investing a million and having 8 million over 30 years. I want the first one. So you stay in, you add if you can, if you have dry powder, you add during these periods of weakness, markets are up 80%, two thirds to 80% of the time.

Nancy TenglerAnd this is a transformational period like the 90s was. And I was managing money then. So I was there, I saw it. There was a lot less skepticism then. That’s the good news. In this market, investors are still skeptical. That means we can go higher.

Caroline WoodsStill skeptical, but we keep hitting all time highs despite the fact that you talk about the earnings growth. But there’s a lot of headwinds that this market is up against, including oil that continues to not be all that far from $100 barrel yet. Yeah. You know.

Nancy TenglerAlways climbing a wall of worry. And the question is what is the market looking through to. And the market ultimately and always is looking at earnings and earnings growth. And the productivity gains that we’re going to see from these tech and, and are seeing from these technologies. That’s also been our theme for the last four years because that’s what we saw in the 90s okay.

Nancy TenglerAnd it worked.

Caroline WoodsAll right. Well, I think it’s a good time to transition to our rapid fire game of this or that. Quick questions, quick answers. Are you ready?

Nancy TenglerI hope so all.

Caroline WoodsRight here we go. Bullish or.

Nancy TenglerCautious.

Caroline WoodsBullish this rally justified or overdone.

Nancy TenglerJustified based on multiples.

Caroline WoodsBuy here or wait for lower.

Nancy TenglerI’d add some here and continue to.

Caroline WoodsI winners chips or infrastructure.

Nancy TenglerBoth.

Caroline WoodsSoftware reset or still at risk.

Nancy TenglerI think it’s a reset a rerating.

Caroline WoodsOf the stocks. One software name you’d buy here.

Nancy TenglerMicrosoft one.

Caroline WoodsYou’d avoid.

Nancy TenglerAdobe.

Caroline WoodsBig tech after earnings higher or lower, probably lower margins, sustainable or peaking.

Nancy TenglerI think they’re sustainable due to productivity.

Caroline WoodsMicron or Nvidia?

Nancy TenglerOh, we, both. At this stage, I’d say Nvidia.

Caroline WoodsNvidia or Microsoft.

Nancy TenglerNvidia.

Caroline WoodsPalantir or Microsoft.

Nancy TenglerPalantir.

Caroline WoodsGE for Nova or Nvidia.

Nancy TenglerGE or Nova.

Caroline WoodsTesla or Nvidia.

Nancy TenglerThat’s a hard one. Caroline. Tesla from here.

Caroline WoodsServiceNow or Microsoft?

Nancy TenglerServiceNow.

Caroline WoodsAdobe or Salesforce, neither would you be a buyer of the Oracle weakness.

Nancy TenglerWe own it. It yes. At the margin.

Caroline WoodsHighest conviction trade in your portfolio right now.

Nancy TenglerI’d say GE Ivanova.

Caroline WoodsAnd just quickly biggest risk to your bullish view.

Nancy TenglerDisappointing earnings.

Caroline WoodsDo you have a price target for the S&P 500 for 2020.

Nancy TenglerNo we don’t do that. But it’ll be higher.

Caroline WoodsHow much higher I.

Nancy TenglerThink we have 10% from here.

Caroline WoodsOkay Nancy always a pleasure. Thank you so much for your picks and your perspective. Thank you so much. That’s Nancy Tngler, CEO and CIO at Laffer Tengler Investments. If you enjoyed this street talk, check out our full interview with Jim Cramer. He breaks down exactly where he’s putting money to work right now.