The Producer Price Index (PPI) unexpectedly dropped in May, signaling cooling inflation. However, Northwestern Mutual Wealth Management chief investment officer Brent Schutte believes the economy is still on track for a recession and joins Morning Brief to lay out his case.

"I think investors are discounting too easy of a process. They think miraculously inflation is going to come down without causing or having the economy slow too much to cause a recession. They think the Fed is going to be able to miraculously cut rates and keep a slowing economy from moving toward a recession," Schutte says. He believes that a recession is the most likely outcome, pointing to the low-end consumer already under pressure from credit card and auto loan debts.

Schutte explains that the current market is bifurcated: "While the S&P is up, every other part of the market is down. And the S&P has been driven by the 'Mag Seven,' which are up 17% while the rest of the S&P 493 names are actually down 2%." He adds, "I think there's opportunities for investors. Unfortunately, they're not in places that people are looking right now."

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This post was written by Melanie Riehl