Full Transcript Below:

Caroline Woods:Joining me now, Mish Schneider, Chief Strategist at MarketGauge. Mish, thanks so much for being here.

Michele Schneider: Thank you so much for having me. Nice to see you.

Caroline Woods:Let’s start by talking about Alphabet because Alphabet shares are powering higher today, really giving the NASDAQ a boost following that antitrust win. What’s your take on that development, Mish? Does that make you more bullish on Alphabet shares?

Michele Schneider:Well, certainly the fact that they don’t have to sell off the Chrome business and that they have to share data with competitors also was a boon, by the way, for Apple. It definitely makes the stock attractive. However, I personally am not a chaser of momentum-type situations. So that was a really much better buy right after earnings, I think. And so if you were sitting in the stock, obviously you’d be looking pretty now. Getting in right now, you’d have to ask yourself the risk factors. But you know, they say long, long until you’re wrong. And right now, it looks pretty good.

Caroline Woods:OK, so not picking up any Alphabet shares today. But when you take a look, the NASDAQ is mostly erasing yesterday’s losses, thanks in large part to this big move higher in Alphabet. Do you think that’s enough of a positive catalyst to help this tech rally continue higher? Because yesterday was a different story.

Michele Schneider:Well, it was very interesting yesterday because even though we saw the sell-off not only in NASDAQ but in the whole semiconductor space, which has been the growth and leadership over the last few years, it wasn’t at a concerning level. And so what we’d like to look at is the whole market broadly and where the rotation was, which was really into small caps and retail, which was interesting. And the financials, which is kind of healthy because that’s more U.S.-centric. What we needed was growth to stay in the game. So now the fact that we’ve reversed that, that’s healthy for the entire market. It shouldn’t impact the small caps and the areas that the money was flowing into on this rotation. And it’s certainly not only helped the growth areas, but I would say the whole market right now certainly doesn’t look weak. It looks very strong. And that’s in the face of a lot of cracks under the floor, if you will.

Caroline Woods:So the bull market is still intact?

Michele Schneider:The bull market is still intact. I don’t see any problems. Maybe if we start to falter in some of the weaker areas. Semiconductors was one, but we can see that’s reversed today. Transportation was another, but that’s still holding on to major support. I would need to see what I call the weak links turn into something more like anchors, if you will — something that really weighs the market down. And of course, in terms of that, if you look at the out influencers of the market, we would have to continue to watch the yields, the dollar, the gold, the silver. What are they really saying? And right now, nobody seems to really care very much about all of that.

Caroline Woods: What is gold really saying, though? Because gold is at all-time highs right now, at the same time that the stock market is very close to all-time highs.

Michele Schneider:Well, right now, for the first time in 30 years, gold buying by central banks has surpassed bond buying, which is very interesting. And that’s, I think, why a lot of analysts here are starting to feel concern, because what gold is saying is that there’s worry about the sustainability of the debt, as we know, which continues to climb. And yet people have been worrying about the debt and the government spending for years. Also, the concern about the autonomous nature of the Fed and what happened with Powell when he was in Jackson Hole, and what’s going to happen with the whole Federal Reserve lowering interest rates into an inflation that right now stubbornly will not go below 3%. Gold is like the reflector of all of that and has been now for years. But like I said, until we start to see some real heavy anchors in the market, at this point, all money is flowing into equities and gold and silver, and I think you need to have all in your portfolio at this point.

Caroline Woods:Would you add at what, 3500?

Michele Schneider:Well, Friday was a great day to add last week. I mean, now of course you’re chasing in, but I was a former gold and silver trader on the floor in New York. And I can tell you that when the metals start to go parabolic, there is money to be made. The only thing is you have to change your tactic, which you always have to do anyway with commodities, since they’re not stocks. You have to think more actively when you’re buying into a parabolic move. Take your profits on the big moves if things start to turn lower, or get out quickly and keep probing. But right now, the core position in gold I’ve been talking about for years, and silver, and I would watch silver very carefully right here.

Caroline Woods:All right. And I should note it’s not 3530 — 3621 right now. So you talked about the move higher in gold, a reflection of concerns about the sustainability of the debt. Doesn’t seem like you’re worried about the sustainability of this rally, though. That said, September is historically the worst month for stocks. So talk to me about how you’re positioning amid what could be seasonal weakness.

Michele Schneider:Well, I’m going to areas that I think have a lot of potential regardless. And of course, energy has been a big one for us, and not necessarily crude oil. I would stay away from the oil market because there’s so much conflicting news about supply and demand. But natural gas looks like it’s bottomed out. Obviously, uranium has been on a tear. If you’re looking at some of the major oil companies, they’ve been doing better. We also like to expand outside of the energy space. I have been really big into what I call the vanity trade, which is really basically the diet drug companies and then the types of areas that consumers who are off are going to for the first time. Like, for example, looking at stocks like Nu Skin, which has rallied, ELF, which is doing great, Ulta, which had incredible earnings, also doing great. You know, where would people go if they’re now thinner for the first time? And there’s a bunch of places. Match.com looks good. Stitch Fix, which is an old dead company, is starting to perk up a little bit here. So I’m looking at that. Obviously, if we see a major downturn, everything will downturn. But I would be a buyer on the dips, particularly in those areas.

Caroline Woods:Actually, on that note, less about vanity but more about retail. We also have Macy’s powering higher today after earnings. Would you say that you’re betting on the strength of the consumer at this point, or just the consumer that has shed this weight and, you know, might have a different lifestyle?

Michele Schneider:Well, we have a nuanced consumer. I think that’s the best way. I mean, obviously Affirm, which is the buy now, pay later stock, did very well after earnings. And that’s what a lot of people are doing. People are more cautious in how they’re spending money. And we’ve seen certain areas go down — like, for example, alcohol sales have gone down, some of the fast food has gone down. That’s again all part of the vanity. But I think that right now, what the consumer really wants more than anything is lower interest rates. And that’s what they’re waiting for, and that’s what they’re anticipating. However, with all that said, inflation and higher prices — that whole consumer sector has done a lot better. And yeah, the Macy’s earnings was a great beat and a great surprise, especially though seasonally we have back-to-school. They’re saying as we get into Christmas and holiday spending, we might see a downturn. But for now, as long as we see that XRT, which is the ETF I like to watch because it’s discretionary and staples, does well and stays over, say, 82, there’s no reason to be bearish there as well.

Caroline Woods:OK, and just finally, we have the August jobs report out this Friday. What are you expecting from there and how crucial is that report, especially when it comes to your bullishness?

Michele Schneider:Well, again, it’s going to be more interesting about the revisions because obviously that’s what we saw last month. And I’m always a little bit — I look at these numbers more as lagging than leading indicators. But what will make this one interesting, of course, is because Powell was so clear about being more worried about the labor market than he is about inflation. And so if we see a drop in labor, then I think that September rate cut will come even in the face of the rising bond yields. The question is how much and will it be enough at this point. But I think that the jobs report will be more important to the Federal Reserve than it will be to people trading the market.

Caroline Woods:All right. We’ll leave it there. Mish Schneider, Chief Strategist at MarketGauge, thanks so much for sharing your insights and your picks.

Michele Schneider:Thank you, Caroline.