Yeah, turning back to the major averages joining us
now, matt or in chief market strategist at Carillon
Tower advisers and matt, any broad takeaways on how
markets closed out the day ahead of them being closed
tomorrow for thanksgiving. It can great to be back
and it's definitely an ugly day. We're not used
to seeing a lot of red on the tape.
I think it's been 29 trading day since we've even
had a day with more than a plus or-1%
move on the S&P 500. So it's been pretty
steady water lately and that's largely result of the fact
that the economy in general has been doing well,
the consumer has been doing well and most importantly earnings
have been very, very strong for a lot of
companies. And certainly the market as we saw today
doesn't like when there's a little bit less visibility into
what the future might look like this. Covid surge
or the new Covid variant, that we don't really
have much information what the market is, certainly reacted
pretty violently to it. And for for us,
as I look at the market, it certainly seems
like when you look at some single stocks, there
could be opportunities. I'm still very optimistic on where
the market goes heading into the end of the year
and starting out 2022 because the fundamental backdrop, I
don't really think change as much as a result of
this. Now we noticed that like you said,
it's been pretty good for a pretty long time.
In fact, stocks usually do well on thanksgiving week
going all the way back to the fifties. So
other than the covid variant where there are other factors
at play that led us to what we're seeing now
on the board with so much loss. Yeah,
this year has definitely been anomalous and a lot of
respects. And I think this week is just another
example because the markets as of late have been really
headlined. So the markets have been moving in reaction
to the Fed, is the Fed going to push
taper forward a little bit more? What's, what
are the minutes saying about the potential for rising rates
next year? And we have largely been training based
on a lot of that news. And so again
, today, another big headline comes out and so
it's not surprising to see the market continuing to move
based off of that because we are arguably with stretched
valuations with having such strong gains for the year.
Some investors are a little bit nervous or maybe want
to take a few more gains. But for long
term investors, the fundamental picture remains very positive.
So any weakness that we get here, I think
needs to be used opportunistically, I've been saying that
to our clients probably for the past 12 months in
any sort of weakness to to be willing to be
a buyer and start waiting into waters. And there's
a lot of areas like healthcare, certain pockets of
information technology that are a little bit more fairly valued
, that still look really, really attractive And if
today shows us anything it's why balance is so important
in your portfolio while you can't be leaned into cyclicality
or just leaned into growth in your overall allocation.
Now we've seen this this price surge drop right now
and it seems like we're getting a little bit of
like sticker shock because the news just dropped. But
come monday and come the next day. Do you
think that these trends will continue with folks selling and
seeing such low numbers or will eventually stable lost if
we get more news when it comes to this variant
and how it's going to be affecting the U.
S. Yeah. I would be surprised if we
see too much prolonged selling off of this because you
look at what happened today today almost feels like a
capitulation type day. You have the mix up 45%
. That's a huge number of the vix is almost
back to the levels where we were in september when
the market had fallen 67% and back in May where
there were more fears over the delta variant and that
all happened over the span of one trading day.
You're seeing elevated put volume and it's the day after
thanksgiving a lot of folks aren't working so volume is
pretty thin as well. So all of the price
action gets a little bit more magnified. So I
think as we digest some of this information as we
get more details because we really don't know a lot
about what this variant is. It's all just based
off the headline. I think as we digest it
it will be a lot more clear as to what
the picture looks like going forward. But again I
really don't think this changes the long term narrative of
the upward move for the market Now. I want
to transition to crypto for a moment because Bitcoin was
down 20% today from its all time high which it
reached earlier this month. So can you speak on
what led to this in the general state of the
crypto market? We don't directly invest in crypto is
but I like to look at crypto in general as
a barometer for risk sentiment in the market and really
more speculative risk sentiment. And you started to solve
Bitcoin fall I'd say along with the more richly valued
parts of information technology as I think investors may have
been worried about a more accelerated taper the potential for
rising interest rates. I think that may have started
the risk off sentiment for Bitcoin and also it's one
of the best performing asset classes if not the best
performing asset class for the year. So there's some
really really strong gains for for Bitcoin and a lot
of the other crypto complex. So it's not surprising
to see a little bit of profit taking into year
end and a lot of this activity was based off
of new E. T. F. S being
launched a lot a lot of activity in the space
and that's starting to cool off. So it's only
natural that you're seeing price kind of moderate itself a
little bit but I don't think it's an indication of
weak risk sentiment. You haven't seen it plummet uh
And it's moved more in tandem with richly valued parts
of the market. So so to me that says
it's more of a concern of just of the ease
of money and what that looks like in the future
then people not being willing to put money to work
despite where the markets are Now. In a recent
report last week from your company, you said that
you believe that consumer spending remains in good health elaborate
on that. Yeah. Can I always say never
doubt the American consumer, we're great at spending money
that we have and we're even better spending money that
we don't have and right now we have a lot
of money. I mean since February last year the
American consumer has accumulated$2.4 trillion dollars in savings since
the pandemic started. That's a vast amount of money
and what we're seeing from credit card readings and more
real time data from jpmorgan and Bank of America whose
customers are using their credit cards. You're seeing very
robust levels of spending and that was reiterated during earnings
season when you had Big box retailers report last week
, even ones that that cater, I'd say more
to the price conscious consumer, their earnings were incredibly
strong. There were not margin pressures. People were
willing to spend a little bit more for goods and
continue spending in volume. Home improvement, same exact
story. So the consumer is in great shape and
if they're, if they end up being more fears
, I think you just see a shift in behavior
may be a little bit more e commerce vs.
In person, but the overall level of spending likely
isn't going to change. And the data has certainly
been backing that up for the past six months or
so. Alright. My last question for you is
what is your market outlook for 2022? Like what
investor advice would you give going into the new year
as well? I think like I started off the
segment saying balance is going to be really, really
important. I think moving straight into cyclicality and a
reflation type trade where a lot of these reopening companies
continue to do Well, I think that might be
a little bit overstated. I think you need to
be very selective in what you own and lean into
quality companies that have stronger earnings growth companies that have
a little bit less leverage. I think all of
that is going to be important and the stocks that
you own are going to be? We're going to
make more of a difference, especially as you start
to see, uh, potentially elevated tapering and looking
towards the end of easy monetary policy. Favorite sectors
, I think health care, which is one of
the worst performing sectors this year, earnings have been
incredibly strong. People continue to spend money. It's
a huge growing area of the economy. I think
that looks very, very good. And I think
more fairly valued areas of information technology continue to be
attractive as well as financials who should benefit from a
rising rate in a steepening yield curve environment. Matt
or in chief market strategist, said Caroline tower advisers
man, it's always a pleasure. Thank you so
much for sharing your expertise and happy holidays to you
and your family.