Investors shouldn't get overly excited over recent CPI data, says Franklin Templeton's Mike LaBella

HIGHER RATES FOR LONGER. SENIOR PORTFOLIO MANAGER AT FRANKLIN TEMPLETON INVESTMENT SOLUTIONS. GREAT TO SEE YOU, MIKE WHY DO YOU THINK WE’RE HEADING FOR A HARDER FALL HERE W >> WELL, NOT THAT IT’S GUARANTEED DON’T GET OVERLY EXCITED GREAT TO SEE GREEN ON THE SCREEN AFTER SUCH A ROUGH YEAR. LAST YEAR ONE OF THE TOP FIVE WORST MARKETS IN ALMOST 100 YEARS, BUT DESPITE THE GOOD CPI REPORT TODAY WE HAVE TO REMEMBER, THERE’S STILL A LONG WAY TO GO. THE WAGES AND SERVICES COMPONENT, THE CPI, STICKIEST AND WILL REQUIRE MOST AMOUNT OF WORK THE FED WILL

CONTINUE TO RAISE RATES AND THEY KNOW THE LESSONS OF THE 1970s THEY’RE GOING TO ERR ON THE SIDE OF RAISING TOO MUCH RATHER THAN DECLARE VICTORY TOO EARLY. IF THE FED IS SUCCESSFUL WINNING THE BATTLE WITH INFLATION WHAT ARE WE THEN LEFT WITH? THE ECONOMIC SLOWDOWN AND RECESSION. HOW BAD IS THAT? WHAT IS THE IMPACT ON EARNINGS AND THAT COULD BE THE NEXT MAJOR HEAD WIND FOR THE MARKET IT’S IMPORTANT NOT TO DECLARE VICTORY TOO EARLY RIGHT NOW. >> ONE OF THE THINGS THAT’S INTERESTING IN MY NOTES FROM YOUR EARLIER CONVERSATIONS FROM ONE OF OUR

PRODUCERS IS THAT YOU SAY, HIGHER RATES WILL SHIFT FLOWS FROM EQUITIES TO FIXED INCOME BASICALLY, THAT FEELS TO ME — I READ A PIECE

FROM HOWARD MARKS A COUPLE DAYS AGO. THIS FEELS LIKE AN EPICAL CHANGE IN INVESTING, FOR THE PAST D DECADE OR MORE BONDS WERE NOT INVESTABLE YOU GOT NO RETURN FOR DOING THAT NOW YOU’RE GETTING TO A POINT WHERE THE THERE IS A NORMALIZATION, LET’S CALL IT, OF INTEREST RATES AND SO FIXED INCOME LOOKS MUCH MORE INVESTABLE >> IT’S GOING TO BE A MAJOR REGIME SHIFT, TYLER AND IT’S GOING TO BE GENERATIONAL

RIGHT? A DECADE — A GENERATION OF INVESTORS HAVE COME TO THE MARKET PUTTING MONEY IN SAVINGS ACCOUNT OR BUYING BONDS HAS DONE NOTHING FOR THEM USED TO SAY NOT ALTERNATIVE BUT EQUITIES NOW THERE ARE ALTERNATIVES THE EQUITY MARKET HAS TO ADAPT ONE OF THE MAJOR AREAS YOU’RE GOING TO SEE THAT ADAPTATION IS AROUND EQUITY MARKET VALUATION EQUITIES HAVE TO PROVIDE MORE IN THE REALM OF EARNINGS AND PROFITABILITY IN ORDER TO GARNER THOSE TYPES VALUATIONS THEY SAW IN THE PAST. THE TYPES OF STOCKS THAT ARE GOING TO DO WELL WHEN FIXED INCOME IS AN ACTUAL OPTION

ARE DIFFERENT THAN THOSE OVER THE LAST TEN YEARS YOU’RE SEE A BIGGER SHIFT IN VALUE IN AREAS OF THE MARKET POTENTIALLY GROWING A LITTLE LESS, A LITTLE MORE STEADY, SLOWER, BUT WHERE THERE’S GREATER EARNINGS PROFILE TODAY. >> VERY INTERESTING. SORT OF AGREES WITH WHAT HOWARD SAID DON’T WANT TO PUT WORDS INTO THIS MOUTH FAR FROM ME TO DO THAT, BUT THE IDEA IS THAT IT THE KINDS OF STORKS THAT WI