Chris Konstantinos, RiverFront Main Expenditure Strategist, joins Yahoo Finance’s Alexis Christoforous and Kristin Myers to focus on the current market outlook and higher than predicted jobless promises.
Online video Transcript
ALEXIS CHRISTOFOROUS: I want to stick with the markets now and deliver in Chris Konstantinos. He is chief expenditure strategist at RiverFront. So Chris, we just closed out the market’s most effective thirty day period, at the very least for the S&P 500, because November. And we have bought the S&P now higher than 4,000 for the very first time at any time. It seems like we are kicking off the second quarter on a fairly awesome notice. In which do you see the management for this current market this quarter? And are things going to adjust at all?
CHRIS KONSTANTINOS: Thanks. Yeah, many thanks for obtaining me. Thanks. That’s a fantastic question. What’s attention-grabbing I assume about what is happening ideal now– and Jared pointed it out a several minutes previously– is that on a day like now when, all over again, historic day with the S&P 3,000 or 4,000, it really is truly not staying led as a great deal by the cyclical and deep price plays that have been genuinely the emphasize of Q1. It can be remaining led by a lot more of a mixture of organizations, and significantly, some factors happening in the much more advancement-oriented names. You pointed out tech and semiconductors.
And I think this could be a very little little bit of a harbinger of things to arrive, when I assume Q2 is going to be pushed additional by corporate earnings and a minor bit a lot less by some kind of good suggest reversion in valuation multiples off deep cyclicals. So what we’re recommending is a barbell of secular progress stories and some worth and cyclical plays, but not heading entire hog into the cyclicality simply because we consider a significant portion of that go has now happened.
KRISTIN MYERS: All ideal, so Chris, as you’re talking about this, of program, I want to question what the tech tale is going to be in 2021 for the rest of the 12 months and probably even into 2022.
CHRIS KONSTANTINOS: Certain. Perfectly, you know, and this is like a concept that we have talked about a bunch in the past, and I even now assume it has legs. The theme listed here is that you have a large amount of some of the extra esoteric components of tech and some of the, quotation unquote, “COVID performs” that have been bid to the moon. And some of the valuations on individuals types of companies look speculative to us.
Having said that, you have a bunch of other mega cap tech providers that are really, genuinely stable providers, a very little a lot less pretty, if you will, but create remarkable free of charge hard cash stream. And in some cases, basically also crank out solid earnings progress prospective and dividend development opportunity as perfectly. These forms of points are not as thrilling for buyers, but they are just fantastic money circulation generators.
And several of these businesses, which are family names, nevertheless traded what we feel to be comparatively realistic valuations, particularly for the reason that they haven’t gone everywhere, truly, in the very last quarter or two, as these, quotation unquote, “extensive length” plays have fallen out of favor. So we however think you will find a honest quantity of chances still left in the tech area, but it is in all probability the significantly less hot– you know, think about software program and solutions styles of providers, versus the high flyers that dominated definitely because the summer of previous calendar year.
ALEXIS CHRISTOFOROUS: I want to get your feelings on the employment report, the every month careers report out tomorrow. Nowadays, of system, we acquired the unemployment benefit figures coming in a very little more robust than predicted, 719,000 Us citizens making use of for initial-time advantages. I guess, the very good news there, even though, is that continuing promises basically declined, as did the whole acquiring rewards by all governing administration plans. So that, at least, is one thing encouraging. What do you hope from that positions quantity tomorrow? And what is it going to consider for this sector to respond in a massive way to that report, irrespective of whether it arrives in a lot more robust or a large amount weaker than envisioned?
CHRIS KONSTANTINOS: Yeah, I am definitely happy you brought up employment due to the fact I think this is one of the definitely vital fulcrums for the market place due to the fact it’s one particular of the genuinely significant fulcrums for the Fed. And what I imagine modern info highlights and tomorrow’s info is in all probability heading to do as effectively, is that the work industry is even now hugely dislocated. And this is a thing that Jay Powell has talked a bunch about. If you seem at his modern communications with the push and with the industry, he’s designed statements all around the impact that, yes, we have a 6% unemployment, but it’s genuinely closer to 10%, since a great deal of people have forever dropped out of the work sector, which is not a good detail.
So when I see that continuing statements number, of course, that is superior news in a sense. But I don’t feel it is the whole photo of what is really taking place on the ground. I imagine the US labor market place is however remarkably, highly dislocated. And rather paradoxically, I imagine this is basically a good point for stock markets, even even though it really is a horrible point for our nation and its workers. The explanation I feel it’s paradoxically a excellent matter for the inventory current market is because I feel it keeps the Fed accommodative for extended.
And once more, all I have to do is go back again and appear at the statements of the most influential customers of the Fed, together with Jay Powell. And I assume his modern statements corroborate this. So, if you glimpse at employment, if you look at entire work, we’re so significantly away from reaching full work in this region, no matter of how you outline it, that it really is most likely we consider that the bond market place is getting overly conservative as it relates to when it thinks tapering and, you know, price hikes are on the horizon. We believe that is a ton even further out.
ALEXIS CHRISTOFOROUS: Yeah, and absolutely, Fed Chief Powell has reported time and time once again they’re going to wait around for whole employment before they make any type of a go. So, thanks so a lot, Chris Konstantinos of RiverFront, for joining us.