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Crossmark's Victoria Fernandez on why she's taking a 'barbell' approach when investing right now

Victoria Fernandez, Crossmark Global Investments Chief Market Strategist, joins The Final Round to discuss her barebell approach to investing amid COVID-19 and why she's been turning to staple stocks like Walmart and McCormick.

Video Transcript

MYLES UDLAND: All right. Welcome back to "The Final Round" here on Yahoo Finance. Myles Udland with you in New York. Let's talk a bit more about everything going on in this market. We're joined now by Victoria Fernandez. She is the Chief market. strategist at Crossmark Global Investment.

So Victoria, I guess let's just start with the market at record highs here. Obviously, we've spoken over the last few months when the markets rally was underway. But here we are continuing to defy I think a lot of people's concerns about the real economy. And are things as disconnected, I guess, in your view as some narratives may suggest?

VICTORIA FERNANDEZ: Right. We keep hearing, Myles, the story about how the economy and the market are two different things. But I mean, obviously they're correlated and they're feeding off of each other. You've got the Fed saying that we're going to have low rates for such an extended period of time. Tomorrow morning, perhaps we'll hear even more details on that.

And that's kind of feeding some of the stock prices as well. You've got people looking for yield, trying to find places for that, whether it's dividend stocks, whether it's these growth names that we're seeing right now that continue to run. But they're running because you've got people changing the way that they're living their daily lives.

And it makes sense that we're going to see names like Salesforce or Dick's with their online sales increasing what three times I think Melody was saying earlier. So I think you have this connection that's going along. But it's all going to be driven by the progress we see in COVID and what the vaccine news is going forward, along with consumer demand. Those are the two main things we're going to be watching.

MYLES UDLAND: Now obviously, it's-- I mean, it's been almost a full month now since we've had those enhanced unemployment benefits expire. So for most real time data seem to be holding in better than I think a lot of people expected, certainly better than I expected. Does it seem to you that maybe the strength of the consumer and the way consumers were able to repair their own balance sheets in the early phases of this crisis, was that perhaps underappreciated by investors?

VICTORIA FERNANDEZ: Absolutely. And I think the savings rate increase that we saw was underappreciated as well. I mean, we got up to like 25% on the savings rate. That was huge, compared to where we were pre-COVID. So consumers had a little bit of a cushion built in with some of that extra unemployment insurance that they had.

And then look at those household balance sheets, like you said, credit card debt came down tremendously. The only place we saw an increase in household balance sheets was in mortgages. And the housing market has just been so strong, the one area we've really seen that V-shaped recovery.

So I think consumers are in a good place right now. The question for me is going to be, if we continue to not have a new deal, if we continue to not have unemployment insurance come back into play, how long does that savings that they've built up, how long does that optimism that they have continue?

We saw some of the consumer sentiment numbers this week were less than what we anticipated, both on current conditions and on expectations. So that leads me to be a little bit worried about how much they're going to spend going forward. But for right now, we seem to be in pretty good shape, and we can see that from the durable goods orders this morning.

MYLES UDLAND: As you mentioned, you know, some of those big cap tech names that you like right now. Are there other sector styles that are more interesting to you in this environment? And also, are there things you want to stay away from? I don't know if you have an opinion on financials. It seems like everyone has an opinion on financials.

Because so many people have said, well, look at all the cash. And it has continued to really be a dog here for the last couple-- not just this cycle but really the last couple years.

VICTORIA FERNANDEZ: Right. JP Morgan's actually a name that we've added to our portfolio over the last couple of weeks, not necessarily because we anticipate a huge steepening of the curve. We've seen it a little bit over the last 10 days or so, some of that having to do with the treasury auctions that were coming. So we saw that move a little bit higher.

But we're looking to try to do a barbell approach in our portfolio. So yes, we had some of those high flying names. We've trimmed some of those. We've trimmed Apple. We've trimmed Microsoft. But we're looking for more some staple names. We added Walmart to the portfolio. We haven't had that on the portfolio for a while. So we added that in. We figure that's going to be your best retail play next to Amazon.

We added McCormick. So you have more of a staple name there with people cooking more at home. And in the financials, like I said, we added JP Morgan. But you can look at other areas in financials. We talked before about adding S&P Global into our portfolio. So you can do some different kind of financial names.

But we would recommend doing kind of a barbell. Because you don't want to be all in these growth names and then have some positive news on COVID and make that a COVID bet, and then that turns around on you. So it builds up from some of that more fundamental strong balance sheet names and add some of that to your portfolio.

MYLES UDLAND: All right. Victoria Fernandez with Crossmark Global Investments, always great to get your thoughts. Thanks so much for joining the program.

VICTORIA FERNANDEZ: My pleasure.