In this weekly Jarvis® Update, Left Brain’s Director of Research Brian Dress interviews CIO/CEO Nolan Langford to review recent market performance and discuss two main topics: whether inflation has peaked and how investors should deploy cash. The episode opens with a market recap—S&P up 1.3%, Nasdaq up 0.5%, Russell 2000 up 3.6%, VIX below 20, and 10‑year Treasury rates fluctuating between 2.5% and 2.9%. They examine CPI (8.5% YoY, down from 9.1%) and PPI (‑0.5% MoM) and note gas prices falling below $4 per gallon, asking if these signal a peak in inflation. Langford advises investors to shift focus from macro headlines to micro‑level company fundamentals, highlighting energy stocks as a cheap, cash‑generating theme and recommending a “barbell” portfolio that pairs energy exposure with other equities. The conversation moves to a 21‑stock “bounce‑back” list, emphasizing resilient companies such as The Trade Desk, which benefits from ad‑supported streaming despite broader streamer struggles. Finally, they discuss putting excess cash to work via corporate bond ladders offering 4‑8% yields, arguing that bank savings under 1% cannot keep pace with inflation. The episode ends with a call to action for viewers to engage, subscribe, and contact Left Brain for personalized advice.
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Are we reaching peak inflation? We answer this question and more on this week's Jarvis Update. I'm your host, Brian Dress, Director of Research here at Left Brain, joined by our Chief Investment Officer and CEO, Nolan Langford. Nolan, welcome to the program.
Thank you, Brian.
It's great to be with you again this week, Nolan. And a quick preview for everyone before we get started. Again, markets were higher again this week. I think that's 4 or 5 weeks in a row. Improving earnings and of course inflation data really were the drivers. We've got 2 topics for you. The first is, have we reached peak inflation? And then the second is, what should you do with cash in the bank? With that said, we're going to jump into a couple of announcements. We produce this show for you, the everyday investor, whether you have an IRA or 401(k), handle your own investments, or work with an advisor that buys mutual funds and ETFs. If you'd like a second opinion, we'd love to talk. Make sure you give us a call at the number below. And also, if you're an institutional investor, there's something for you as well. It's our research service, Left Brain Investment Research. We put out 8 to 10 full-length reports per month on stocks that we follow and also The Chosen. That's our favorite stock and favorite income security idea each month. So we'll put the link in the description below and check that out. Either way, sign up for our biweekly newsletter, which is off this week, but we'll be back again next week. Jumping right into the market recap. First of all, the S&P was up 1.3% this week. Nasdaq was up half a percent. And the Russell 2000, which is the small-cap index, was the real leader with up 3.6% this week. So the rally continued. Looked at this indicator the last few weeks, the VIX. That's the volatility index. It's dipped below 20 this week. It ended above 20, but definitely looking like a little bit less volatility in the markets. And then another point that we wanted to bring out for you was the 10-year rate. The 10-year Treasury rate was down almost to 2.5%, but jumped almost to 2.9% today. So a lot of volatility in 10 years. We're moving back toward 3%. With all that as a backdrop, Noland, what are your initial thoughts on this week's action?
Obviously, the price action was really good. And the reason I give it a thumbs up is it was accompanied by more positive data points. So you mentioned the inflation, but you know what we pay— that's a macro factor. What we pay attention to is the microeconomics. I.e., what companies are doing. And as you mentioned, we're at the end of earnings season, but we're still in earnings season. So we like that stocks are moving positively when companies report. And there are some exceptions where companies report not so good earnings and their stocks fall, à la Sonos today. But generally speaking, we've seen positive responses even when earnings are underwhelming. Um, and so I think those are really, really good data points. And then finally, your peak inflation narrative, another data point. I've seen a headline today that gas prices have dropped below $4 a gallon. So, um, that has to be a really good data point as well for the consumer.
Definitely not in Illinois yet, Nolan, but, uh, we'll wait for that $4 gas here. All right, we'll jump right into our topics. So topic 1, have we reached peak inflation? So no one will cite a couple of data points for the viewers at home there. Consumer Price Index, that's the CPI, came in at 8.5% year over year. It was 9.1% last month. So that's an improvement. And then the data point that really excited investors yesterday on Wednesday was the fact that it was 0% inflation month over month. So it looks like readings are getting better there. Producer Price Index, PPI, came out on Thursday. We saw -0.5 month over month. So even better on producer prices. Nolan, have we reached peak inflation? I think that's the question that all investors want to know. And then if we have, what are the implications for investment investors?
So I'm not sure. I don't know if we've reached peak inflation or not. We know the Federal Reserve Board between now and the next meeting is going to be paying attention to all these data readings. They're going to be data dependent. Which is really good instead of them being set on automatic. I think the more interesting thing for the individual investor, which is what we focus on, that's who we manage money for and who our prime client is, Mr. or Mrs. Jones that either owns a small or mid-sized business or works for some company where they spend a good chunk of their working life there and maybe they've accumulated company stock or stock option. And they have to decide, hey, how do I invest my excess monies? And how do I prepare for retirement, put my kids through college? And a lot of that happens in, in the publicly traded markets. I think for Mr. or Mrs. Jones, it is time to sort of think about the portfolio of the next 2 to 3 years. And I think it's time to stop worrying about inflation, stop worrying about the macro factors, and get back to doing what we need to do, which is just invest over the long term. These things will tend to sort themselves out. Yeah.
After all, Nolan, it might have been transitory. I guess we'll find out in the next few months as the data comes in. But like you said, it's a lot more interesting to focus on the micro and not on these macro factors. It's not really our, our wheelhouse, and it's good to be able to start thinking about individual companies again. One thing that I think is interesting that came out this week was oil was up 7%. Oil has been kind of weak over the last few months or the last couple of months. Natural gas up 8%. Does that change things at all, or is that maybe just kind of a temporary blip? And if that's the case, how can investors position to guard against sort of if inflation does stay around?
Um, yeah, so those week-to-week movements in oil prices and natural gas prices and inflation readings, they're what I call for the most part unknowable. In the shorter time frame you have, the more unknowable they become. It's just a frustrating exercise to try to predict, predict where those prices are going to go. That being said, we like energy. I like energy as an investment theme. The fossil fuel businesses, they're cheap, they're unloved, and they're gushing cash. And so I don't really worry about on the headline what natural gas or oil prices are doing on a weekly basis. I just look at the band, and as long as they stay above $80, $85 a barrel, The companies, or at least the ones we're following, are going to do exceptionally well. And what I like is they're absolutely committed to returning that cash to investors, whether it's through share buybacks, whether it's through paying off debt, or whether it's increased dividends. In some cases, they're doing all three. That capital return story and those high free cash flow yields are going to be too juicy to ignore at some point.
I'd also mention something that you said earlier this week, Nolan, which was, was we do like that energy exposure as a way to create kind of a barbell portfolio. You've got that energy exposure. If there is inflation, oil prices go higher, you're going to make money on that and it can help buoy your portfolio if the other stocks do fall. So with that being said, we do want to remind you to like and share this video if you found it useful. Love to see a comment below. We love to engage with you, the viewer. And answer any investment questions you might have. And then finally, please subscribe to the channel and hit the bell for notifications so you can find out when the next video comes out. And they do come out every Friday. With that behind us, Nolan, topic 2. So topic 2 is our bounce back list. And it's also kind of connects with something we've been talking about with clients. One way to deploy cash in the bank is our bounce back list. So, Nolan, we have spoken with clients over the last few months, other investors in some recent events that we've had. We've learned anecdotally a lot of investors are holding cash in the bank, which can be dangerous in an inflationary environment even if that headline number does subside. Uh, Nolan, we've got 21 stocks on our bounce-back list. Some of them were pandemic darlings and some of them were brand new ideas. What are a couple of the bounce-back ideas that you like?
So there's a lot to like here. And just so we're clear on how we came up with this bounce-back list, again, we intently listen to the microeconomics. That is, we're in earnings season, so we want to jump on these earnings calls and see how these macro, you know, these inflation factors, supply chains, slower economic environment, all of that is impacting these businesses one by one. And what we found, at least for the most of the companies on the bounce-back list, is there has been very little negative impact to their business, even though you've seen these huge headlines suggesting we're heading to a you know, a recession or maybe worse. So that's the first thing. A lot of these companies we consider to be resistant. Um, they're not immune. It just means their businesses are durable enough that they can withstand a slower economic period if we go into one. But most of these businesses on the list, the bounce-back list, aren't seeing a slowdown. And I just, I found that worthy of attention. That caught my attention.
Sure. Do you want to share with the viewers maybe one or two of them that you think, um, you know, have a chance to bounce back here over the next 2 to 3 years?
Yeah, so one of the industries is streaming, and we've seen the headlines from, you know, from the big streamers— Netflix, Roku— they're not doing very well. They're spending a lot of money to try to get viewers to watch what they have and to produce content, but there's so many different options that streaming's really having a tough time, especially since COVID is over and we're not parked in front of the TV 10 hours a day. However, a big part of the business, digital advertising, which flows through streaming. A lot of these streaming services, you know, you can either pay monthly, or what's starting to be more popular is this ad-supported model. And now we all have smart TVs, which is how we stream, and that opens up a completely different inventory for advertisers. If you're a big consumer package company or an auto —then that gives you another place to advertise. And there's a company, The Trade Desk, which has an independent digital advertising platform that either marketers or advertisers will use to find out the best places to place their ads everywhere, either on the internet or on connected TV. So it turns out the Trade Desk business is actually getting better. It's getting stronger. Everything that's hurting the individual streamers is actually helping, uh, The Trade Desk as well as the third parties. Cookies being removed, and there's just a lot of positive flow from Trade Desk and from digital advertising, even though we've seen something different on the headlines. So that's, that's a name that sticks out to me.
It's really interesting, Nolan. We've watched, as you said, all these streamers struggle and all these digital advertisers have some issues, but Trade Desk, they've been plugging right along So when you know that sort of the environment is difficult and a company continues to perform, it's a really positive sign. And then, Nolan, one more thing we wanted to discuss here today. You know, the market's been tough the last 6 to 12 months and a lot of investors have been letting cash kind of build up in their bank accounts. What should investors think about doing with cash in the bank as we may be starting to come out of this bear market here?
We like the idea of putting cash to work. You know, if you have emergency funds that you need access to, spending cash for your monthly bills over the next 6 months or so, then you should probably keep that liquid. Anything in excess of that, we think it's probably time to put that money to work. You're sitting there waiting for rates to go up. Rates are going up, but the money that they're paying you at the bank still is not adding up. If you can get over 1% on your savings these days, that's a big number, and you're still not keeping up with the 7%, 8% inflation. So it's time to put it to work. We keep a list of bonds. These are corporate bonds that you can buy. And depending on the credit quality and how long you want to lock in rates, you can get yields anywhere from 4% to 8%, depending, which we think is very, very attractive, especially compared to money market rates at 1%. So the investments themselves are not riskless. There will be some volatility to them, and you have to watch them to make sure the companies are still in good shape so they can continue to pay interest. But if you create a bond ladder and you have diversification, uh, 4% to 8% are really attractive yields. 4%, 5%, 6%, 7%, 8%, again, depending on the credit quality and the timeline.
Yeah, as you said, Nolan, when you're talking about less than 1% at your bank, it's probably time to look for a different place to park that money. It's almost like having it under your mattress in a way. So yeah, we're looking at stocks and bonds. We've got our bounce back list here at Left Brain and then we've got a whole long list of bonds that we find attractive. So if you're looking for a way to park your money somewhere else other than just in the mattress, give us a call again. We'll put that again. We'll put our number in the description down below. So give us a call and we will give you some of our thoughts. With that, Nolan, we're heading right into NFL preseason. I'm going to get to see Patrick Mahomes throw about 3 passes this weekend. So that's exciting. Um, with that, we're, uh, excited to have you all, uh, with us this week. Thank you for— Nolan, thank you for being with us, and thanks to the viewers. See you next week.
