Kathryn Rooney Vera of Bulltick Capital Markets discusses the latest comments by Larry Fink on the outlook for a global recession.
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Transcript
Well there are no signs of a global economic recession in the coming 12 months that's according to BlackRock CEO Larry Fink. In an interview with a German business newspaper laughing saying that they Conmee is not great but it's also not bad. And he's warning that that we are in the late phase of an economic growth cycle. Joining us now is Kathryn Rooney Vera a Head of Research and Strategy at ball. Catherine thanks for joining me say 20 your thoughts on Larry Fink's comments. Do you also agree that maybe I guess where do you think we are right now in this bullish economy.
Well back in the summer when it was not consensus that was my view that the U.S. was not on the precipice of recession and that was what you did. How did you all of my clients and to many of the media outlets that played in December when the S&P had dropped almost 20 percent factoring in U.S. recession China trade more theories on the Fed action recommended long S&P 500 long industrials long energy long financial long emerging markets among Chinese equities. Now we're up double digits across the board. The question that I'm asking myself and the clients are asking me now is Where to. So I think I've agreed with him since December when it wasn't popular. Now really no one's asking about US recession anymore so it's a it's the correct view. It's a little bit late. I think that's correct. But again it is easier now to say that we can see that the market is more internalizing that theU.S. is not the cusp of recession. In fact far from it.
So they haven't. Where are you seeing opportunity. Right now we're coming off this tremendous rally you're saying that your clients are asking you where to put their money what are you recommending people buy.
Well the fact is that we are in the early stages of an economic the economic expansion. So you do want to defend your office. I'm going to defend your profits and the way you do that. Right. My guys is five puts on your upside. Yes if you can by December expiration close there attractively value your downside and you maintain your upside. You're going to want to do that. Yes. Are you going what do you got for China. China consumer discretionary is up 37 percent since we were record in December. We do think there's going to be a quarter in the U.S. and China and yet another output since December of last year. And now what we want to do is either take profits or defend those profits. The other thing you're going to want to do is increase your increase your positions in low correlated assets to the S&P. So there is volatility which there's inevitably going to be and you want to protect your Alekseyev protect your profits are going to get it you know P eager to get it to reduce or increase some cash or at least protect your portfolio by staples like consumer staples and other ways to do so. That said I do think that this year is going to be a year where risk reward favors taking on risk. So by emerging markets older emerging markets stay in equities don't sell. You can increase cash on positions that are up 25 30 percent. But I would say stay invested in this market.
Haven't we had one of our marquee guests on earlier today. Her name is Courtney Domínguez she's with pain Capital Management. I was talking to her about the tech sector and just the tremendous run that we've been seeing.
She was warning that the tech sector is way too crowded right now meaning now is the time just to take a break. What do you make of that argument.
Well Terry Sherman has seen a spectacular run after it got severely beat up right. So if you want to take profits as I mentioned it's always good to realize high double digit profits especially in a volatile sector such as tech it is a cyclical however and I do think that structurally is where you want to be over the long term. So certainly it's a good idea to take some profits but I would say at least maintain some exposure to tech because I do believe that we are in a cycle that's structural. And what I mean by that is we're in the second industrial revolution with technology in this country and in the world but on steroids. So this is a structural phenomenon of an economy that's increasingly automated increasingly robot size.
And I think it's important to maintain some exposure that growing sector of the economy hasn't quite just what are your thoughts on earnings season so far this is going to be the busiest week for the quarter. Lots of talk about the slowdown that we are expected to see what it puts on the horizon for you.
So lots of talk about earnings recession right. Every quarter I hear consensus and in the media I them earnings you said didn't happen this quarter last quarter. What's going to happen in the next month. So look I think that earnings are going to surprise to the upside. I have Fink's growth for the full year at 8 percent that's the consensus. So I do think that earnings are going to continue to surprise on the upside because fundamentally as economists we look at this and we say look if there's growing demand that corporations respond to that demand. And I think that we are in a virtuous cycle of higher demand growth in inventories and improving earnings from us also look there are certain sectors that you want to play industrials are going to continue to outperform. I like financials I think they've been beaten up too much. So I do think there are certain sectors better than others but in general let's stay invested in the S&P 500 I think earnings are going out right for.
