So let's turn back to the major indexes stocks ending
at their session lows with losses accelerating in the final hour
of trade ahead of that key inflation report that will
get tomorrow for the month of May and consumer prices.
And joining me now is Art Hogan chief market strategist for national Holdings,
which is the parent corporation of several financial services companies.
Art,
it's good to see you and unfortunately the sentiment
among investors worsening as we headed into the close
what was behind the action today.
I think there's a couple things first and I think first and foremost,
you know,
it felt as though over the weekend we were getting
better news on the china zero covid policy lockdown.
So then that went to reverse this morning.
So hearing about, you know,
a couple million people being shut in certainly doesn't speed up the recovery
of china and the global economy but certainly doesn't help us unglued those
supply chains that we're concerned about and clearly that had been a wish, right?
And I think that
you take that coupled with the fact that the
number one concern that investors have right now is
inflation.
And we've really had no catalyst this week in terms of economic data and fed speakers
have been on a on a quiet year in front of the meeting next week.
So you put those two things together today and it feels as
though the markets trying to predict a very disappointing sleepy eye tomorrow,
not just in equity markets, but if you look at the yield markets,
the yield on the 10 year and the yield on the two year bouncing a bit higher after,
you know the U.
S. Tenure had gotten down to 2.76 just six trading days ago.
So about 3% Certainly,
you know sort of inflicts that or or brings on that risk off mode.
And it almost feels like someone's got a copy of the CPC report already.
Especially as you look at the Treasury market.
So and again we do anticipate that consumer prices more than 8% or at least.
That's a consensus among economists for the month of May.
We guess that when we get that price data out tomorrow morning art
but as we enter the summer months, how are you feeling?
Are you optimistic or pessimistic about the path board for the stock market?
We've come off of our lows
that we saw in May but there are some calls that we could retest those levels.
Yeah there's always a potential degree Tesla's levels but I think you need a
whole lot more in terms of negative
catalysts that we haven't effectively priced in.
So you've got a war in Ukraine and that's been going on for four months now.
So I think the markets had plenty of time to sort of look at the consequences of
this is an ag prices.
I think this china lockdown story if we can get that behind us.
And it feels like we're getting closer to that. Not as close as we'd. Like.
But it put those two things behind us and then start
looking at the data in terms of the sequential improvement,
right?
So March was likely the peak and cp I april saw some sequential improvement on
a month over month basis and will likely
see some improvement in this print tomorrow.
So you take all that together and say, well what else do we know?
And we certainly know that there are those companies that
are coming out and pre announcing for the next quarter,
but more having to do with currency issues than having to do with demand issues.
So I still think that corporate balance sheet is in really good shape,
but I think a couple of things can fall in
the right direction if we see a sequential improvement.
Um and the and the inflation figures on a quarter over
quarter basis through the second quarter and into the second half,
that likely will mean that we priced in a lot of the things that we know
um in terms of valuations,
we we started the year with a multiple about 21 a half for the four or
12 on the S and P 500 that's worked its way down to about 16 times.
So we're in a better place.
Um We've been stuck in place for, you know, about two weeks,
but we're in a better place on a multiple basis.
And uh I think all of those things sort of add up to the
fact that we're probably closer to the bottom in the middle of the cycle.
Okay.
Certainly good news for investors are growing concerns that
a recession might be on the horizon in 2023.
We still have a summer to navigate consumer price index
tomorrow morning
Fed decision next week.
Even though we do expect the Fed to raise rates by half of a percentage point.
And as you mentioned, that has been
well broadcast, what are you advising investors do right now?
Should they stay the course or are there actionable moves that they should take?
Well,
I I think some of the actual moves that
you should take when you look at your portfolio is
make sure it's diversified and make sure all of your
growth stocks are measured in a price to earnings,
right?
You know,
we'll hear from stitch fix and rent the runway and doc you sign over the course of,
you know,
the after hours here and all of those still fall into that bucket of very disruptive
but still measured on a price of revenues.
And,
and I think those stocks still will feel the pressure
because we don't know where interest rates peak here.
But if you're looking at companies that have
had multiple contraction and have strong cash flows,
um, strong businesses and are measured on a P.
E. I think you can get into growth stocks at this level.
I think we've done a lot of multiple contraction
there on the other side of that barbell,
you want to make sure you have exposure to cyclicals, things like energy.
The best performing sector in the S and P.
500 last year will be this year, likely will be next year.
Financials and industrials.
So if you balance that off and try to try to avoid that temptation that hey,
the stock is down 50 60 70%.
It must be a deal here because those stocks can still go down another 50%.
All right, Stay with me.
I do want to break in with an earnings alert because you mentioned rent the runway.
We've been covering it all day long and that stock actually soaring in
the after hours as we get the earnings alert for rent the runway,
the stock up 10.5% in the after hours.
Better than expected earnings per share even though it
was a loss and better than expected sales plus
Better than expected outlook for the full year
when it comes to revenue. So the numbers are
an earnings per share loss of 67 cents.
But Wall Street had expected an earnings per share loss of 73 cents.
So again, not as bad as projected
and revenue coming in at 67 million. Wall Street had expected
64 million.
The company also providing for your
sales guidance well above Wall Street's expectation
kind of coalescing around that $300 million mark.
Wall Street had only expected $202 million.
So very nice outlook there again, all sending the stock
higher in the after hours. This combination of factors.
Also,
some comments from the Ceo and co founder jennifer Hyman saying our
strong performance evidence of our firm
position in the broader experience economy,
which has enabled us to make significant progress on our path
to profitability and achieve record ending
active subscribers in the first quarter
of 20 and 22.
So are what this signals to me is that this economic reopen is
underway a year after it officially
started with vaccinations and covid treatments.
A desire to get out and be social again,
whether that's at the office or with your friends and family at events
and personal gatherings. What's your take on rent? The runway's results.
Yeah, I think that sums it up.
If we're gonna have two million weddings,
this wedding season rental runway is gonna have a busy
summer time and I think that it offers that value.
You oftentimes think about, yes, I've got to go to three weddings this year.
Do I really want to buy three different outfits for that or
is there a more value conscious way for me to do this.
It's very much like that. You know what I think is going to be one of the,
the,
the winners and that sort of inventory issue that a lot
of the big box retailers have and that's the discount change.
Like the T. J. Maxx is in the raw stores rental one fits into that value proposition.
Yes, we're out and about doing things we haven't done for a couple of years.
We need to be appropriately attired for that
runway seems to fit right into that narrative.
And I certainly think with a stock down 55% year to date,
it had a lot of room to make up and certainly a pretty big air pocket.
Like we're sitting in the trading run after the report.
Right?
So even though it's getting in the after hours,
I mean we're talking about a 22 cent game
technically on a per share price trading at $3.75
a piece when the recent 52 week high was $24.77.
So you write a massive, massive pullback that we've seen in this particular stock,
even though companies,
some companies are able to cut costs,
they're able to capitalize on consumer spending.
Or do you anticipate, we could see an environment where we see more hiring freezes.
We see more layoffs
as consumer spending could start to pull back.
Yeah.
If you look at the announcement that stitch just made
six stitch fix making announcements bubbling out 15% of their
Go back over the course of the last two weeks
for the companies that have actually talked about laughs,
we probably lost about 25-30,000 jobs in a two week period in announced layoffs.
That makes sense.
You know,
the bad news is that's the first line of defense from companies want to cut costs
and they see a slowing
environment for demand for their particular goods and services.
The good news is we have two jobs available for every person looking for one.
So the only way to get that back and balance is to see this kind of slow down.
It's actually what, you know, brings inflation down.
It keeps wage price pressure in check.
And I think it's one of the natural things that we suspect
we're going to see over the course of the next six months.
Alright, Art Hogan, chief market strategist for National Holdings,
are thanks so much
for coming on the show and dropping your knowledge. We appreciate it.