CNBC International Live Sep 18, 2026
With Nancy Tengler, CEO and Chief Investment Officer at Laffer Tengler Investments
S&P 500 earnings have grown about 25% so far this year and price-earnings multiples have fallen, which is Nancy Tengler's answer to anyone calling this market euphoric.
The week's news was a run of chief executives talking about training AI models responsibly, and the market read it as the start of something. Tengler would welcome a pullback and does not expect a bear market out of it.
"Well, I would welcome a correction actually because we haven't really had one for quite some time and that's always a good way to recalibrate a market that's run this hard."
Tengler is chief executive and chief investment officer of Laffer Tengler Investments, and the relationship between bond yields and share prices is something she has watched through a career of it, which is why she reached for a study rather than a forecast when the 5% question came.
The full segment is covered here so you can skip it.
Here are the 7 arguments that matter.
Key Takeaways
She would welcome a correction and does not expect a bear market, because she reads this as a repeat of the DeepSeek scare
A correction is usually 10% to 15%, and she expects the lower end of that range
Earnings growth of about 25% with multiples falling is why she says this is not the 1990s
A third of the market raised revenue guidance for the next quarter and the coming year
The absolute level of yields barely correlates with share prices, on a Goldman study she cited; the rate of change is what matters
She does not think a rate rise is needed, expects one anyway, and expects stocks to rise on it
1. The CEOs Are Managing Optics
The host opened on the week's run of AI safety commentary, including the Salesforce event and Mark Zuckerberg on training models safely, and said it is clearly an issue.
The host asked what to make of the commentary
What do you make of all of this commentary that's been coming out of these meetings, that Salesforce event, and now we have Mark Zuckerberg talking about training models safely?
A host
Tengler's first answer was that none of it was new.
She heard nothing she had not heard before
Well, I hope that was always an issue. I didn't hear anything new from Mark.
Nancy Tengler
What she sees is narrative management
But what I will say is that it appears to me that the CEOs are trying to redirect the narrative to be responsible and to look responsible.
Nancy Tengler
She does not treat that as empty. If the companies get there, the output is a set of rules they write and agree on between themselves.
Self-regulation is the useful end of it
And I think if they accomplish that, they'll be able to provide self-regulatory guidelines where they're all in agreement.
Nancy Tengler
Which she would count as a good outcome
I think that would be much better for society and the industry.
Nancy Tengler
2. Congress Can't Regulate This
Her reason for preferring industry rules to legislation is a recent example.
The Clarity Act is her evidence
You have to look no further than the Clarity Act to see that Congress has a hard time regulating things they don't fully understand.
Nancy Tengler
3. Capex Is Not Slowing Down
Whatever the companies say about pacing themselves, Tengler does not expect the spending to change.
The technology is not going back in the box
Again, as I said, I hope they were already doing that, but separately, it is almost going to be impossible to put this genie back in the bottle.
Nancy Tengler
A slower pace at the margin, not a halt
They may slow the pace at the margin, but I don't anticipate that we will see the hyperscalers suddenly not spending on CapEx or any infrastructure slowdown.
Nancy Tengler
The build-out is already running hard
That's in process and it's pretty aggressive.
Nancy Tengler
4. A Correction, Not a Bear
The host asked what the phrase heard repeatedly that week, pacing the frontier, means for the stock market, and whether it marks the start of a correction.
The host asked whether this is the beginning
What does it actually mean though? What does it mean for the stock market, for example? Is this going to then end up being the beginning of a correction?
A host
She would welcome one
Well, I would welcome a correction actually because we haven't really had one for quite some time and that's always a good way to recalibrate a market that's run this hard.
Nancy Tengler
But not a bear market out of this
But I don't think that we will see a bear market come out of this.
Nancy Tengler
Her precedent is the DeepSeek scare, when the consensus was that Chinese models would take the inference market.
The last version of this scare did not happen
Remember the Chinese were going to take over AI inferencing and that isn't in fact what happened.
Nancy Tengler
And the direction of copying runs the other way
So, they're using our models to develop their open-source models as opposed to vice versa.
Nancy Tengler
Her instruction to holders follows from that. Algorithms read the headlines and create the short-term moves.
Volatility is an entry point, not a risk
If you're an investor as opposed to a trader volatility is your friend and you use it to add to high-quality positions.
Nancy Tengler
5. The Size of the Pullback
The host raised September's reputation for volatility and the bond-market problems Treasury Secretary Scott Bessent has been describing, then asked for a number.
The host asked her to size it
Could you put a number on it in terms of sort of the percentage proportionate change?
A host
She put it at the low end of 10% to 15%
Well, a correction is usually 10 to 15%. I think we will err on the lower end of that range in this particular scenario.
Nancy Tengler
Her reason for expecting the shallow version is how the market entered the month.
September is weak, but it started 12% up
Yes, we have a seasonally weak September, but going into September in a strong position of up about 12%.
Nancy Tengler
Which historically has meant a positive month
Historically, that has meant that you have realized positive returns in September.
Nancy Tengler
And she expects a strong fourth quarter regardless
So, again, I think it doesn't really matter if you're an investor because the fourth quarter is going to likely be robust.
Nancy Tengler
6. Multiples Came In, Not Up
The evidence behind that call is the gap between how fast profits grew and how far prices went.
Profits grew and the multiple fell
Why do I say that? Earnings growth was remarkable year-to-date and price-earnings multiples have actually declined.
Nancy Tengler
She put the earnings growth above 25%
So, we've seen earnings growth of about 25 plus percent.
Nancy Tengler
Which is why the 1990s comparison fails
So, this is not the 1990s in terms of euphoria and overvaluation.
Nancy Tengler
The delivery is still coming through
These companies are still delivering very strong earnings.
Nancy Tengler
And guidance is going up, not down
A third of the market increased their guidance on revenues for the next quarter and into the coming year.
Nancy Tengler
7. Yield Levels Don't Matter
The host put the 10-year yield at 5% to her and asked whether higher for longer now has to be priced in.
The host noted 5% has not broken anything
And Nancy, we crossed the Rubicon of 5% on the 10-year yield and that hasn't exactly heralded the zombie apocalypse in the equities market yet, has it?
A host
And asked about higher for longer
But do we need to price higher for longer given the fact that inflation is looking increasingly unhinged?
A host
Tengler answered with research rather than a view.
A Goldman study found little correlation to the level
Goldman did a study where they looked at the correlation between stock prices and yields and it confirmed what I have experienced in my career that there isn't much of a correlation in terms of the absolute yield.
Nancy Tengler
Both ends of the range have worked
You could make money below 3% and above 6% as we did in the 1990s.
Nancy Tengler
What matters instead, she said, is the speed of the move and the reason behind it. Part of the reason the 10-year has crept higher is American growth, with nominal growth running close to 7% this quarter and possibly 8%.
The rise is partly a growth story
I think one of the reasons that the yield has slowly been creeping up on the 10-year is because of growth in the US.
Nancy Tengler
Further rises would freeze housing and cool inflation
If we see continued increases driven by bond players, traders, and also by the Fed, the housing market will freeze up in the US and that will put downward pressure on inflation.
Nancy Tengler
But she says the tool does not fit the problem
But you can't solve a supply-side energy inflation problem with monetary policy and I don't think a hike is needed.
Nancy Tengler
She expects one anyway, and expects stocks to rise
I think we'll get one and I think stocks will likely go up on the news tomorrow.
Nancy Tengler
Bonus Insights
The backdrop is benign apart from two things
So, I think this is a pretty benign backdrop other than the ginormous wall of worry in the Middle East,
Nancy Tengler
The second item she named alongside the Middle East was the Federal Reserve.
Tengler's bottom line is that a 10% pullback would be healthy rather than the start of something, because earnings are growing faster than prices and the level of the 10-year yield has never been what decides equity returns.
Products, Companies & Tools Mentioned
Laffer Tengler Investments (Tengler's firm, where she is chief executive and chief investment officer)
Goldman Sachs (Author of the study she cited on the weak correlation between the absolute level of yields and stock prices)
Books & Resources Mentioned
The Clarity Act (Her example of Congress legislating on something it does not fully understand, and her reason for preferring industry self-regulation on AI)
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