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‘The more we try to find other places to go, the more tech ends up being the answer’: strategist

Michael Antonelli, Baird PWM Market Strategist, joins The Final Round to discuss his views on the markets and what investors should be watching as more news about the 2020 elections and coronavirus vaccines continue to dominate the headlines.

Video Transcript

- Welcome back to "The Final Round" here on "Yahoo Finance." Stocks posting gains to start the month of August with the Dow closing up just over 200 points, NASDAQ hitting a record. For more on this, we have Michael Antonelli. He's that market strategist at Baird. And Michael, it's the first trading day of August. Things look OK. You can't make too much out of one day, but seasonally, though, we talked about it at the top of the show that August is one of the most bearish months for stocks. So what, exactly, is ahead? What should we be bracing ourselves for in the weeks ahead, at this point?

MICHAEL ANTONELLI: Yeah, hey thanks for having me on. I made a quick call to our institutional trading desk. In my previous life, I was an equity trader for about 12 years. So I reached out to these guys, and I said, what's on institutions' minds? What are they looking at right now? And one of them was what you mentioned. They said August, September is traditionally kind of two of the worst months for the S&P 500 returns. August is usually just a slow month to begin with. You got half of Europe on vacation, a lot of Americans take vacation.

But, we're kind of in this weird unusual moment. I was looking at volume today, and volume is actually still pretty high in the stock market. So all these seasonalities, I think, that we used to look at in a normal year, we might just have to toss some of these out the window, kind of given the state of the world that we're in.

So Michael, with that being said, then, what is your strategy, then, going forward? Just because so much has changed, like you just said, over the last several months. Clearly, we're in the midst of a pandemic. It's not anything like we have been in here any time recently. So how are you positioning your portfolio? Where are you seeing opportunities at this point?

MICHAEL ANTONELLI: Yes, so there's two things, I think, that most people are looking at right now, whether they be institutional OR whether they be retail. Number one is kind of this fiscal negotiation. That's far and away the thing that's talked about the most by investors. You know, what are we going to do with the extended unemployment benefits? What does that negotiation look like? Number two is, can this rally sustain ex-tech? And I thought about that today. I tried to think about a really good take on that.

But I think most of this is just people moaning that they don't own enough tech. I think that's just ultimately what it ends up being. Oh, gosh, I want equal weight to catch up. Well, that kind of means I don't own enough tech. So I can't decide whether that's signal or noise, but those two things are kind of dominating peoples' minds. And I think that the more we try to find other places to go, the more tech ends up being the answer.

ANDY SERWER: Yeah, Michael, sounds like Apple's well on its way to to two trillion, the way you're talking, in terms of peoples' sentiment out there. Hey, I want to ask you, you know, when you're talking about the summer being slow. And of course, it usually is. But what about in election years? And, you know, when do things start to pick up, or do they pick up because of that? And then, what's your positioning and thinking about that this time around?

MICHAEL ANTONELLI: Yeah, so one of the things that I think most people keep asking or thinking about is, when is it going to matter? When does the election matter for the market? Should it matter? When does it matter? I think most traders, most institutional managers, have said not yet. They think probably post-Labor Day. Polling is what it is, polling hasn't changed all that much. Betting markets haven't changed all that much.

So one of the things that we've been doing with clients is talking about, you know, thematic strategies. If the Democrat wins, here's what sectors should benefit. If the Republican wins, here's what sectors should benefit. Our partner at Strategis, this really awesome research firm, has 50 thematic baskets on that stuff. So we've kind of transitioned to not yet. And then, if this certain party wins, here's things that we can do regardless of who ends up in the White House.

- Michael, Ines here. Earlier you mentioned that some investors may be complaining that they don't have enough tech. But what do you buy other than tech right now?

MICHAEL ANTONELLI: You know, there's a lot of great companies out there that we talk about all the day-- all day on Twitter. There's great consumer names. There's great retail companies. If you look at companies like Lulu and Chipotle and Spotify, there's good companies executing on their business plans. I'm not saying those are all buys, but there's lots of great companies out there that don't have to be Apple, Microsoft. Take-Two is one of them you guys were just talking about. There's a console cycle coming up. We're all-- the whole world's about to buy new consoles, so the video gamers all of a sudden become a thematic play.

So don't get bogged to-- too much bogged down in a Microsoft and Apple. There are lots of ideas out there. There's lots of great themes going on right now. Don't focus on it too much, I guess.

- I like that, Michael, because we've been talking a lot about tech here on the program. But you're saying that there's a lot of other opportunities out there. It's not just some of those big tech names that we all love to talk about so much. Michael Antonelli, market strategist at Baird. Thanks so much for joining the program.