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Markets And The Reflation Trade - YouTube
Channel: TD Ameritrade Network
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so walk me through the way you're
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viewing the market right now is it seems
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we've got progress in the economy we see
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the employment situation improving yet
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we also continue to see a tenure yield
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that gets lower
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and lower how do we reconcile these
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things
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well our economy is in recovery and we
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look at both from the consumer
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starting to spend as well as businesses
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and cap x
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uh reaching pre-pandemic levels that's
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all very good and when we're coming now
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into
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a new quarter uh we expect that
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we're going to see some positive
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earnings although we see the headwinds
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of
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the supply chain so we're going to hear
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more guidance
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going forward and what the expectations
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are and continued growth
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but still working through those supply
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chain issues
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so if we've got some of these supply
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chain problems resolving
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that's right now leading to a lot of
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people saying our inflation risk is
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passed our peak inflation concerns are
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passed what do you think about that
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sentiment laureen
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you know we think that it's not
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necessarily transitory inflation that
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it's going to be more persistent
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and that is going to potentially cause
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a misstep by the fed if they don't
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recognize it early enough
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and so i think one of the biggest risks
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to our economy
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is not right now but in the future if
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the fed doesn't act soon enough
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then they may have to be aggressive when
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they do act and at that point
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you know that that that historically has
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not had a great outcome so
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we still see about our markets actually
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july is when it tends to be one of the
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best
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months uh in the post-election year
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and so i think that just right now
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things are good as far as the markets
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are concerned
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but investors need to be looking forward
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to
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those inflationary impacts and what that
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could mean to the economy eventually
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i think the point that you bring up here
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about the fed potentially
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overstepping or misstepping is very
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salient to our discussion this morning
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because
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it seems that our good data is not
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enough to get yields
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moving meaningfully higher and then as
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the fed gets more hawkish we see the
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yield curve totally
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collapse after their comments do you
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think that concern
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i mean is that i guess a good
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explanation it seems like it would fit
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that the market's worried the fed might
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overact
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right i do think so but it's good to see
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that those uh
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we have some stability there in the
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tenure and
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the other thing i would mention is that
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one of the areas that we
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particularly like in the fixed income
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space
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is local currency emerging market debt
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that's an area for investors to look at
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and
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as we continuously we've saw some
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strengthening of the dollar but we think
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that there's going to be a long-term
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trend of a weakening dollar
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and that's an area that investors should
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be looking at right now
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so lorraine when we look at uh the bond
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market telling us maybe we should be
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worried about
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a a fed misstep or too much tightness
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in policy does it make sense that stocks
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keep making highs in this environment
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well yes i mean so what we've seen right
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now we've seen the comeback of
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technology and now when we look at
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at the markets in large cap space you
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know value and growth are
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just about equal right now whereas there
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was a larger disparity and now that
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large cap growth has come back up so
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that's when you really ask yourself
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where do you want to be over the next 10
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years and you can
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purchase stocks let's just say in the
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large cup value area that should that
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throw off
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dividends um and you're comparing that
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to a still a low
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yielding environment in fixed income
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fixed income has really become more of
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the
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stabilization over in your overall
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portfolio but not really generating much
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in the way of returns and that's why i
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was saying as far as yields are
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concerned and when people are looking
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for yields
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looking outside the u.s and looking at
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merging market debt and local currencies
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could be a good way to add to that fixed
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income portfolio but like you said
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we do think that equities still
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have valuations some areas overextended
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but overall
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uh somewhat normalized valuations
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overall
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so we still see room to run in the
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equity site okay
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and the preference there is for these
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more kind of
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cyclical oriented themes in the market
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does that extend to direct reopening
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plays lately that have been really
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struggling
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airlines cruise lines yeah so we think
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travel and leisure are going to be the
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next areas as we've seen
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as far as hiring is concerned more
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hiring there
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there is the reopening people are
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anxious to get out and travel
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and while those plans may be a little
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bit further out maybe not
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as much this summer but people planning
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right now for next summer so we expect
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that that trend
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is going to continue and that there's
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going to be more travel and leisure
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and those are going to be beneficial for
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those areas of the market
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you
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