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Portfolio Specialist on how to make market uncertainty an investor opportunity

Matt Orton, Director and Portfolio Specialist at Carillon Tower Advisers, joins The Final Round to highlight the day's market action and what is driving markets.

Video Transcript

SHAWNA: To help us get a little bit more clarity on this and the recent volatility that we've seen in the market, I want to bring in our first guest. We have Matt Orton. He's director and portfolio specialist here at Carrollton-- at Carrillon Tower Advisors. Excuse me there, I lost my place in the rundown. But Matt, let me just get to you just in terms of what we've seen recently.

When we talk about the volatility in the market, the wild swings that we got today. The Dow traveling in a 500 point range. How should we be thinking about this?

MATT ORTON: You know, I think it's a really interesting point that Myles had brought up, Shawna, earlier. Is that the market is in between it. We're in an in-between phase. And if we look back to what happened in June and July when we went through a sort of corrective process as well, it took a while for the market to really find footing. And it took some more meaningful catalysts.

Right now there aren't that many catalysts outside of gathering more and more uncertainty. So when we talk to clients, I tend to describe this period as a little bit of indigestion for the market. We've shot up really, really far. We just went through a little bit of a corrective process, taking out some of the froth from the really high flying performers in the information technology space.

And right now, with the absence of many catalysts as we head into earnings season, we're likely going to continue to move sideways. But, when you do have pullbacks in the market, it's important to keep a broader perspective of what has been driving a long term trend. Which in my opinion is still up. That there's a lot of secular growth themes that are still benefiting sectors like information technology.

Given some of the uncertainty around COVID, working from home is still going to be a theme that plays out in the marketplace. You just had a big sell offs in some of the large tech names, which could present opportunities to reset or get in. But also, there's been a broadening out as well.

So then there's weakness in some of the cyclical names that could benefit from longer term strength in the US economy. Those areas start to look a lot more appealing as well. So we try and really keep a bottom up focus on what is going to drive stocks in different sectors going forward. And trying to use some of this uncertainty as an opportunity to get back in, reset our portfolios, and make sure that we are diversified going forward.

SHAWNA: Matt, it's interesting what you were saying, just in terms of the market lacking any catalysts at this point. I guess my question is, can the market resume any meaningful gains, do you think, without more stimulus? How critical is it that we get something from Washington?

MATT ORTON: It's a good point, Shawna. We heard from Powell earlier this week basically saying, prodding the government or pleading with the government to pass some sort of stimulus measure. The challenge now, and I think part of the weakness we had earlier this week is that, now you've had a wrench thrown in potential stimulus plans with a new Supreme Court justice that might take precedent, in terms of a legislative agenda.

But that being said, there was encouraging news today, with Republicans and Democrats saying they're willing to start negotiating again on fiscal stimulus. It's heading into an election. No one wants to be the person saying, I'm the one who held up fiscal stimulus. So if there's some sort of hope or some sort of direction that we can move market, that we are starting to come to a compromise.

That's probably going to serve as enough of a catalyst until we start to get to earning season and really hear from management teams, what trends have been benefiting their companies. Or possibly hurting their companies, so that you can really make sense of where we are from a macro perspective.

- Matt, how should we be looking at the risk of additional closures? We've heard the president say there are no additional economic closures on a federal level. But, you look at, for example, a state like Indiana. They are going full capacity in restaurants, gyms, come Saturday.

And yet, we just had a guest on in the last hour who said that data doesn't support that. So that seems to suggest that the spread's going to continue with the. Virus How should investors be looking at those numbers right now, when we have started to see it tick up again?

MATT ORTON: That's a large part of the uncertainty that we've been seeing in the market. Because even outside of the US, when you look at what's happening over in Europe right now. The UK considering fresh lock downs in the country. Continental Europe going through another surge in cases. How they deal with it could be a precursor to how some states in the US might deal with it.

But that being said, the-- it's really hard to know where people are going to go. I think there is a hesitancy on the part of anyone in the US to completely institute full lockdown again. I think that's going to be really, really tough. But that's also why when we're talking to, clients we're really pushing the idea of keeping diversification and not leaving the previous winners.

Even though we've just gone through a little bit of a reset or taking out some of the froth from tech, those themes are still going to be important. Because, whether or not we fully lock down, we partially lock down. Or people are still just a little bit more uncertain and more hesitant to jump out into the broader economy and start spending again, on travel. Even if it is local or domestic.

You still want to maintain exposure to some of those companies. And so when we think about how you can use this as an opportunity, think about areas that are going to be necessary regardless of what happens. So information technology. IT services have broadly lagged the information technology sector. And the need for Visa and Mastercard is still going to be there, especially as you process more and more electronic payments.

They've been pivoting their businesses, but they haven't been rewarded as much as some of the software and cloud based names. Additionally, health care has been an area that, that's both politicized. There's challenges with reopening it, in terms of whether or not you can do elective procedures. But, at the end of the day, health care represents 20% of the US GDP. And it's growing at 4% per annum, which is even more than then our top GDP rates heading into this.

So that's a natural place to find growth. So we look at areas that have exposure to chronic diseases. Like diabetes, heart disease, that are going to continue to grow in the population. And finding companies that provide a solution to that, that are covered by Medicare or Medicaid, or general insurance policies. So regardless of what's happening with respect to lock downs, we're trying to find these sorts of opportunities in our portfolio. So that the impact of our fresh shut down might help us outperform in those spaces.

SHAWNA: All right. Matt Orton, at Carrillon Tower Advisors. Thanks so much for joining us today.

MATT ORTON: Sure. Thanks, Shawna.