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More stimulus would help us get through this difficult period as we wait for this wave to subside: CIO

Ed Perks, CIO of Franklin Templeton Investment Solutions joins the Yahoo Finance Live panel to discuss the latest market action.

Video Transcript

AKIKO FUJITA: Ed, you know, overshadowed by all the riots that happened in Washington yesterday were the results of the Senate runoff race over in Georgia. You've now got Jon Ossoff also emerging as a winner against Senator Perdue, which means the Democrats have a very, very thin majority in the Senate, only done by the tie-breaking vote from president-- or Vice President-elect Kamala Harris. That certainly sets the stage for additional stimulus, which the market seems to be pricing in as well. Does what played out yesterday change the outlook on that front for you at all?

ED PERKS: No, not really. I mean, I think what played out yesterday certainly had us all watching in disbelief and certainly was impactful. But you know, I think the fact that the market held on to gains and is rallying today really shows that it is forward-looking. And it is-- you know, what the 50-50 split in the Senate does is that it enables things to move forward potentially at a quicker pace.

And what I mean by that is President-elect Biden certainly will get his appointments in more quickly, and we can move forward. Yes, stimulus will be a big part of that, as will infrastructure spending, and investment in the green economy, other things. I think the more controversial or difficult aspects, like an unwind of some of the corporate tax breaks that we saw under President Trump, just overall tax policy changes, maybe an increase in regulations-- those things are kind of further out. I wouldn't say they're front burner items for the new administration. And that's what the market's reacting to.

ZACK GUZMAN: Other than, you know, other topics there in terms of further, out we did see Goldman Sachs say that the Georgia wins there and Democrats taking control of the Senate would potentially move forward the ability or the expectation that the Fed would raise rates. I mean, I would assume that that would be a boost in terms of investors wanting to focus in on financials. We've seen that kind of outperform since those results came in. So talk to me about what opportunity you see on that side of the trade here.

ED PERKS: Yeah, I really see that as just this is very supportive of the consumer. And I think it's something that, you know, is more necessary. We've seen-- you know, and different experiences in different parts of the country-- out here where we are in California, clearly a bit more of a challenge right now with the coronavirus, a bit more of a contraction in a lock down state of affairs in some areas. And that's certainly impactful to the economy, impactful to consumers.

So you know, more stimulus helps us get through this more difficult period as we wait for both this wave to hopefully subside-- clearly, we all want to see that-- but as well this vaccination program, the deployment, getting more out there. And I have a lot of confidence that we are going to see that-- a lot more vaccinations happening in the next three or four weeks.

So I think it's just a critical kind of stopgap, if you will. And that, quite frankly-- I think as we look back over the years, as we look back on this amazing, kind of unique year that we've had, that is the theme that will continually resonate. The actions we've seen, monetary policy, fiscal policy all were meant to get us through this gap. And I think that's the critical element.

AKIKO FUJITA: Ed, you mentioned the vaccine rollout, and we're seeing today, at least in the session, Walgreen's getting a big pop-- that's on the back of earnings, shares up about 7%. But what opportunities do you see as you look ahead to the months ahead on this vaccine rollout-- not necessarily from the drug makers themselves, but those who could really benefit on the back of the actual administration of the vaccines.

ED PERKS: Yeah, you know, I think we are clearly seeing that. And I think you can look, really, at the last three months-- and, yes, the start of the year, we've seen tremendous performance from financials and some of these other stocks that are clear beneficiaries. But the market's clearly had a rotation and a shift. And the technology leadership-- I know we were just discussing Nvidia, which has a nice move today.

But reality, over the last three months, Nvidia is really flat to down and has underperformed. It had tremendous performance before that. So we have seen this significant shift-- financials, and energy, industrials, materials all kind of leading. And while that doesn't necessarily mean tech has to unwind a lot of its gains, I think it's more challenging. It's more of a, hey, they have to now meet the substantial expectations growth that happened over the past year.

So I think we're just really looking at kind of as much diversification as we can get in our portfolios. You know, and there are stocks that-- you know, like JP Morgan, despite the very strong performance the last couple of weeks, is actually still a stock that is down slightly from where it started last year, pre-pandemic. So we still think despite high levels for the overall equity indices, there's a lot of opportunity if you dig a bit deeper.

AKIKO FUJITA: Ed Perks, Franklin Templeton Multi-asset Solutions CIO, appreciate you joining us today.

ED PERKS: Good to be with you.