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Markets higher with earnings, stimulus in focus

Anwiti Bahuguna, Columbia Threadneedle Investments Head of Multi-Asset Strategy, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss what's moving the markets following Tuesday’s opening bell.

Video Transcript

ANWITI BAHUGUNA: Yes, earnings are coming much better than we feared. Actually, I would say economic recovery so far has actually been much better than what we had expected also.

ALEXIS CHRISTOFOROUS: Anwiti, what are you doing with regards to this election? So much uncertainty swirling around. There's talk that it's going to be contested. We might not know who the winner is for possibly weeks after November 3. How are you positioning portfolios ahead of that?

ANWITI BAHUGUNA: It's really quite a short time now, only a couple of weeks left. So really, I think the best thing to do is not to trade too much in your portfolios by and large. You should be very well positioned at this point. As I mentioned earlier when Brian was talking, yes, the recovery has been actually much better than what we had expected both in earnings terms and fundamentally, so it probably makes sense to stay positioned as you were. For us in Multi-Asset, that means staying pretty close to our strategic allocation targets. In other words, not taking a huge bet in either direction. Quite likely, this period will pass, and we'll go back to looking at fundamentals again.

BRIAN SOZZI: Anwiti, do you think we are headed for a pretty sizable sell off if we don't get a stimulus plan later today?

ANWITI BAHUGUNA: I don't think so, Brian. I think market's pretty savvy to look beyond just the two week period or the week to week noise around are we getting the stimulus or not. And really, what's relevant is what happens once we have a new administration in the new year. And quite likely, given how much it's clear that this additional support is needed, once the election is over, quite likely, we are going to see some movement on that front.

ALEXIS CHRISTOFOROUS: What are you looking out outside of US equities right now? Anything in the international market space, particularly emerging markets that's catching your eye right now?

ANWITI BAHUGUNA: Yes, I think once we go through the next few weeks or even months and we have a clear idea on the extent of the stimulus that we have, that is likely to have impact on all the different asset classes. So not just equities, but it likely will have an impact on capping what I think would be treasury yields here in the US and how the dollar is likely to behave again against other currencies. And in that scenario, it is probably likely that we will begin to see a rotation.