Barclays has optimistic price target of 7650 for year-end, how are you feeling about market?
Nicole
Nancy Tengler
We've been optimistic expecting chop this year. Bought S&P calls anticipating trend shift back to fundamentals: operating margins at historic highs, earnings growth mid-double digits, productivity improvements from AI. Optimistic for next 3-5 years.
Are you using volatility to make moves?
Nicole
Nancy Tengler
Yes, during DeepSeek we added to Palantir at $88, Nvidia at 108, Tesla at 240. Adding to software: Palantir, CrowdStrike, Microsoft, ServiceNow.
What about private credit selloff in software names?
Nicole
Nancy Tengler
Private credit issue is gating withdrawals sending message to investors, especially with retail investors in BDCs.
Where could Microsoft be headed and why?
Nicole
Nancy Tengler
Satya Nadella is savvy CEO. Microsoft announced AI pivot/reboot. Added to value portfolio when it was in Russell 1000 Value index, now up almost 100%.
Nancy Tengler
Trimmed Walmart because it got way overweighted, still large holding. Old economy company that pivoted to new technologies.
What about oil? If Strait of Hormuz opens up, do we hit new highs?
Nicole
Nancy Tengler
Yes, that's why we bought calls - cheap way to play melt-up. I do believe we will see melt-up coming. President understands prosperity important to voter. We'll see market return to new highs and fiscal stimulus to offset higher energy prices.
Have you been mostly in tech overall?
Nicole
Nancy Tengler
We were trimming tech names summer through mid-September as they got overweighted, now buying some back. Overweight industrials, consumer discretionary, market to slightly overweight tech, nice overweight financials.
What about consumer spending?
Nicole
Nancy Tengler
One Big Beautiful Bill Act increased refunds by $150B to lower end consumer/taxpayer. They'll spend it, some on gas. Expect COVID check or something. People spending because they have jobs.
Rates at 4.40% on 10-year, felt fast from 3.98 to 4.40.
Nicole
Nancy Tengler
In 90s productivity-driven market, Fed funds at 5%, 10-year 7-8% average. Can still generate economic growth, earnings growth at these levels. Companies with fortress balance sheets benefit from higher rates.
You're really bullish 3-5 years out. Midterm elections often not best year. What are you seeing this year and next?
Nicole
Nancy Tengler
Low double/high single digits for S&P is good year in midterm election year. Productivity improvements from technology spreading across all sectors: Deere, Goldman, JP Morgan AI programs, pharmaceuticals.
Final thoughts on picks? You have real players in top 10 holdings.
Nicole
Nancy Tengler
Need to own those names but not only those names. Adding to industrials and consumer discretionary: TJ Maxx, Ulta. Use weakness to add high quality names with good management teams.
Worried about stagflation or job creativity?
Nicole
Nancy Tengler
Not worried. Highest number of new business applications since COVID. American spirit turning to self-employment, starting business.