Current productivity uptrend can last for some time, says Laffer Tengler's Nancy Tengler

Introduces Nancy Tengler as bullish on growth stocks due to productivity gains, asks her to respond to Mike's view that core PCE at 3.1% means no more rate cuts.

Kelly

Nancy Tengler

Disagrees with no-rate-cuts view. Highlights wage gains above inflation, productivity improving (4.9% in Q3), trend in uptrend. Compares to 90s analog. Believes economy can survive higher rates/inflation but Fed will likely cave and cut rates through the year.

Notes static/tepid job market but points to energy sector example where net exporter status achieved without job growth due to capex/tech. New business applications skyrocketing, suggesting high-productivity entrepreneurship.

Reframes larger rally story as 70s/80s analog where falling inflation/rates is bullish. Asks biggest risk: rate cuts not continuing. Asks probability assignment for that scenario, noting bigger concern for growth stocks/markets.

Kelly

Nancy Tengler

Assigns less than 20% probability. Cites housing coming in, energy prices down, tariffs lapping soon (no new inflation adds). Sees economy in transition like 90s. Doesn't see Fed sitting on hands all year; notes 90s had one hike that didn't derail rally. Fed becoming less important as earnings grow, but watches corporate tax receipts as earnings indicator.

Asks if case for just sitting on hands with broad stock ownership (names Amazon, Google, AMD, Tesla, CrowdStrike, Symbiotic) or if anything more tactical.

Kelly

Nancy Tengler

Uses volatility as friend for long-term (3-5 year) investing. Examples: added to Tesla at 240, Palantir at 88, Nvidia at 108 during tariff tantrum. Need courage to buy, then watch management, earnings growth, revenue growth.

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