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Defensive stocks work the best if you're worried about recession, says Richard Bernstein - YouTube
Channel: CNBC Television
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welcome to both of you rich you you have
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been pretty negative for a while even
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last fall on tech have been right about
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that is the tide turning though are we
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now going into an environment where it's
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recessionary or slow down and you want
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higher growth stocks
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so sarah it's interesting to watch
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what's going on today i don't think that
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the action you're seeing with nasdaq up
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is a recession call i think it's rather
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a call that
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we're going back to 2018 the fed doesn't
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have to put the brakes in the economy
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and we can all speculate again right we
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should all go back if you look at what's
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there it's the bubble stocks that are
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leading the charge again today so you
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know you've mentioned the dollar it's
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pretty ironic the most foreign exposed
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sector is technology we all know that
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the dollar has been strong but yet
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technology's leading
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we know that that um
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you know technology doesn't tend to a
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lot of technology doesn't do well during
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a recession so i think you know yes
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cyclicals are underperforming but again
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you're getting this notion that it's
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either got to be cyclicals or growth
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nobody's talking about defensives
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which is really the group that works the
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best if you were worried that there was
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going to be a recession
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utilities what which one do you like the
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best utilities
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i would say yes staples would be number
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one right no matter what goes on we all
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still eat number two would be health
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care number three would be utilities
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they're not performing very well today
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it's really the bubble stocks that are
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leading the charge
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jim do you agree or do time do you think
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it's time for a rethink
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of tech given a lot of the bad news has
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already been factored in and you see it
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in some of the reactions here we've
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gotten early to earnings and numbers
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yeah i just recently turned positive
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again with with growth and tech in
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general sarah the um
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you know i i think we're going to avoid
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recession i think this is more of a
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mid-cycle slowdown uh that we're
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experiencing and the key here
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uh is in order for the market to rally
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it seems likely to me the market has to
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get an inkling here or a feeling that
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the fed is about done raising the funds
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rate and i think we're getting closer to
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that than we think
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um the the fed you know takes its
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messages from the economy and the bond
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market and inflation is saying the fed
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needs to wind it up growth real growth
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is saying the fed needs to maybe take a
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pause and the bond market anything from
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two years to 30 years just gave a 60
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basis point rate cut
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suggesting that bond vigilantes thinks
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the fed has also done enough so i could
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see another 50 basis point rise maybe 75
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but we could be done at that for a while
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and if that's the case the market sniffs
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that out i think we could have a early
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cycle stock run you get back to early
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cycle growth stocks
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some early cycle cyclicals and you dump
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things like the defensive stocks that
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rich is talking about which have really
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done well this year i think their their
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relative values are pretty high
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i'd start switching away from them if
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you've been there like rich has
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that's that's been great and i pat
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myself in the back and take some profits
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wow
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he went there completely the other way
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is you rich why do you disagree
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well i i would say sarah i think we're
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too focused on an economic recession i
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love jim jim and i have known each other
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for a gazillion years and and we're
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great friends and everything but you
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know as many as senator says my good
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friend from minnesota i have to disagree
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with him and and um i think look why not
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what if we do manage to escape what if
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we do manage to avoid a recession and
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there's been enough pain that the fed
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takes a pause
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so i think what people are missing
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though is that it's going to be that
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it's pretty much baked in we're going to
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see a profits recession not an economic
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recession but a profits recession as we
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head towards the end of a 22-23
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think that's pretty inevitable and i
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don't think we're going to skirt that i
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think it's been very difficult to skirt
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that profits recession but look if we do
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and everything's fine and inflation
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really does go away and then it's 2018
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all over again and i agree with jim that
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you would be you'd want to be in tech i
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just don't think we're going back to
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2018. i think the world has changed
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and portfolio's been very slow to change
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that if we do a mild recession inflation
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is not going to go away
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we need something that's really going to
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stymie demand
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so that we really kill inflation if we
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don't it's just going to be an iterative
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process every time the economy comes
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back you're going to see a little more
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inflation a little more inflation a
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little more inflation i think that's a
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very different world than what people
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are used to
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