“Warren Buffett said that Lizzie was right—because after you said you loved it, even though it went down, he loaded up, and then everyone else loaded up.”

I always enjoy my conversations with Charles Payne, but yesterday’s might have been the best. It’s not every day you get mentioned in the same sentence as Warren Buffett on national TV. I’ll take the compliment… even if it was made in jest!

 

 

Transcript:

Now, my next guest says that we are not there yet, but we could be on our way to a new Fed put. I want to bring in now Evans May Wealth Managing Partner Elizabeth Evans. And Elizabeth, so you’re focused on the labor market, right? I mean, it’s pretty clear that after that Jackson Hole speech, that’s where it’s at right now.

I do want to note the conference board—one of the questions they always ask is about how hard it is to get a job. That’s beginning to spike, and that usually leads to unemployment rate spiking. They follow behind.

So, how concerned are you that that will be the trigger? And how soon can it happen?

Well, good afternoon, Charles. Your point is a good one. I do think it’s still too early to say that the Fed put is back in play. However, given Fed Chair Powell’s more dovish commentary on Friday, it appears that that is the direction the market’s moving. So, presently, with an 87% probability, the market’s pricing in 25 basis points of cuts in September and another 50 basis points following.

So, right now, the market thinks we’ll have 75 basis points between September and the end of the year. The labor market—it seems that the Fed is certainly focused on both of their mandates, but based on recent commentary, it seems that they’re more concerned about the labor market. Although, you did see initial unemployment claims today at 229,000—so below the 230,000 estimate.

So, we’re getting somewhat conflicting data week over week. Although, I’ve said for now, for months, even longer, that it’s not going to be initial jobless claims. This is a hiring thing. It’s not a firing thing—it’s a hiring thing. People are not being rehired. And I think that’s the key. The consumer is also a big key.

Today—talk about conflicting—Fortune was out with this post earlier. They did this survey. It says restaurant visits have fallen off a cliff. Airlines have fallen off a cliff. But Dick’s reported, and Dick’s says they’re not seeing any signs of weakening consumer demand. Although, I should note that the stock is getting hammered pretty good.

So, where is the consumer?

Well, I think that as you look at when the stock fell on that earnings call, I think it was perhaps more of a miss on revenue versus expectations. The consumer is healthy. The consumer is spending. We heard that time and time again this earnings season. So, as we know, Charles, so goes the consumer, goes the economy. And still if you look at the Fed GDP—or the Atlanta Fed GDP model—we’re still tracking year-over-year GDP growth of 2.2%. So, the economy is chugging along.

All right. Chugging along. The banks are going a little bit better than that, right? This is one of the bank indexes, KBE, it’s well above its key moving averages on the verge of breaking out, if not already. They act great.

Bank Stocks: Are you along them? Do you like them here?

The banks have done well. Going into Q2 earnings, the expectation for financials is that we would have year-over-year earnings growth of 5%. And they delivered 12%. So, they are doing very well. With that said, if you look at the XLF, it’s trading at all-time highs. So, I think from an investor’s standpoint you need to be selective about what you’re buying within the banks. And we like Citigroup.

Citigroup, okay. It’s the big banks that seem to be favored. JP Morgan’s stock is on fire. We had someone who liked Citi yesterday saying that maybe it’s the best value among the large players. Let’s talk about small players here. Already, we’ve had a couple of people on the show today saying they like small and mid-cap, you like it here, as well.

A reminder: the Russell well above its key moving averages. It’s something of a double top. But the next move here should really take off.

What do you like about small caps here?

Well, I think that, you know, we saw small caps bounce on Friday with the news out of Jackson Hole. I think that the small- and mid-cap trade, in our opinion, is still too early.

The reason for that is if you look at Q1 and Q2, on a real revenue, currency-adjusted basis, you actually have negative growth. So, we know small and mid does very well when interest rates are low and we have explosive growth. So, our hope is that we’re going there. We just think it’s too soon. So, use that double top, let it pull back from there, and then reassess.

I have a minute to go. I want to hit two stocks with you. One, UnitedHealth. It looks like you were right. Warren Buffett said that Elizabeth was right because after you said you loved it—even though it went down—he loaded up, and everyone else loaded up. It’s still stalling a little bit. These investigations are out there.

Where do you see UnitedHealth going?

Yeah, I think his investment sparked the largest rally in the last decade. And look, UnitedHealth is facing higher medical costs, increased regulatory scrutiny. But they are the largest, most vertically integrated managed care provider with a long runway for growth. So, for long-term investors—patient investors—we still think this is an attractive entry point. And 2026 EPS is going to shine.

All right. By the way, you also like Google. I got to leave it there, Elizabeth.