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Jacob: The jobs report met expectations. 10% tariffs on Chinese goods, could be added. Stocks are falling. Unfortunately, we have corporate investment strategists, Chris Macke. Chris, thanks for being here.

Chris: It's great to be here on a day like today.

Jacob: With tariffs and rates at the forefront, does the market even care about the inline jobs number out Friday?

Chris: As of right now, no. They are focused on everything that you just mentioned, but they will care on Monday. So right now they're a little distracted. But over the weekend they're going to dig into the numbers. They're going to see that we had job growth that was in line but wasn't great. And most importantly, the last three months, the average has been 140,000 jobs created. That's a far cry from the 223,000 in 2018, doesn't mean we're going to recession, but what it means is it's materially slowing.

Jacob: The tariff situation doesn't make any of that better. But now that we have a threat of more tariffs, again, we have this threat. What sectors do you favor now for your clients?

Chris: Well for that, I look at clues in the acute to GDP report and what we saw there was we saw that consumer consumption was up very strongly, so focus on the sectors that are going to benefit from that consumer spending and it actually gets back to some basics. Think about food, think about things in your household, think about what you've got in your refrigerator, think about what you've got in your medicine cabinet homes. I'd be focusing more on those in general.

Jacob: Now with the, so the s and p 500 it's come down a little bit. Obviously it's still up 17% year to date. I was asking you before, do you go underweight stocks? You start really going more into bonds, tater treasuries down a lot.

Jacob: Now for the total portfolio, what's your waiting situation looking like?

Chris: Well the first thing is to understand the environment that you're in. An environment that you're in is you got what you just said, which is near record stock prices and at the same time you've got an economy both domestically and globally. There's slowing materially and that's the driver of earnings. So the first thing is to understand that environment. It's actually to the point where the Fed saw enough threats in the future, not today, but in the future that they cut rates 25% or 25 bits. So they were looking to be defensive. I would make the same recommendation to investors, focus more on the defensive. So whatever your target waiting is for equities and fixed income, tilt that more to the defensive side to the fixed income. And then also importantly with inequities. Look at stocks that are more defensive. So it's not only the equity fixed income allocation, but it's your allocation with inequities.

Jacob: Is there any combination a in a defensive type of stock, whether it's consumer staples, healthcare, something else that is both defensive and maybe a little bit growthy. I know there are no free lunches, but does anything like that exist?

Chris: Yess there are some opportunities for that. It's very difficult to find. And what I will say is that what's most important is to not get caught up in FOMO, fear of missing out. Cause right now what we're seeing is that people are in a state of fear. But remember, prior to this week, people were riding the increasing stock valuations, focusing more on that. We're probably going to go back to that, assuming that the tariff threats kind of settled down a little bit and some other things, and it's important for people to understand the reality of the slowing economic growth that we're looking at.

Jacob: .All right, thanks Chris For being here.

Stock investors have a lot on their plate, and that's not a throwaway line. 

Between the in-line jobs number out Friday (164,000 added jobs), the 10% tariffs threats on $300 billion worth of Chinese goods from Trump Thursday, and the hope for more interest rate cuts, it's hard to know what the market should focus on. 

Slowing economic growth is almost a sure bet, and investors should be prepared for that, according to Chris Macke, corporate investment strategist. 

Regarding whether stock investors are focused on the jobs report, which showed a decline over June's 224,000 net add, "As of right now, no," said Macke. "But they [investors] will care on Monday. So right now they're a little distracted."

Macke added, "Over the weekend they're going to dig into the numbers. They're going to see that we had job growth that was in line but wasn't great. And most importantly, the last three months, the average has been 140,000 jobs created. That's a far cry from the 223,000 in 2018 -- doesn't mean we're going to recession, but what it means is it's materially slowing it. The tariff situation doesn't make any of that better." 

With that backdrop, Macke likes consumer staples, as the U.S. has shown strength. With the S&P 500 still up 17% year-to-date, economic deceleration and the strong consumer, the low volatility staples are a nice haven for defensive investors, especially those looking for strong dividend yields, many of which are higher than the 10 year treasury's yield of 1.8%. "Think about food, think about things in your household, think about what you've got in your refrigerator, think about what you've got in your medicine cabinet homes," Macke said. 

"I would make the same recommendation to investors focus more on the defensive," he concluded. 

 

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