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'Powell is the adult in the room trying to make sure the recovery continues': Advisors Capital's Chuck Lieberman on the Fed

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Charles Lieberman, CIO at Advisors Capital Management, joined The Final Round to discuss his outlook for the market and his thoughts on how Fed Chair Jerome Powell is handling the economy and its recovery amid COVID-19.

Video Transcript

SEANA SMITH: Chuck, we just listened to what Jared was saying just in terms of some of the levels that we've been watching. The VIX dipping today after spiking over the last couple of days. Help us make sense of what we've seen, the recent sell-off over the past three days, the rally today, and where you think we're headed from here.

CHARLES LIEBERMAN: Well, everyone has been saying that the market's expensive, that tech has run up dramatically, all of which is true. But at the same time, tech has been a beneficiary of the shutdowns, of the COVID pandemic, so that part of the market has been very, very strong.

When you look at the S&P, you get exactly the wrong picture. It's roughly flat to slightly up for the year. It's kind of like the guy with one leg in a tub of boiling water, the other leg in a tub of ice water and saying on average he's comfortable. No one would think that the airlines, the hotels, big chunks of the economy which are down 40%, 50%, or even more, are participating in this rally. There's still a lot of recovery room ahead.

So I don't try to figure out where the market's going in the next day or two. As we've seen the last couple of days, it's been awfully volatile, but that's to be expected. There are a lot of uncertainties out there. I'd rather step back a little bit.

There's a recovery clearly under way. Monetary policy is highly accommodative. Sooner or later we might get some fiscal stimulus also, but the economy seems to be doing reasonably well, even without it. So I'm looking ahead to the possibility-- the probability that we're going to get a vaccine at some point, probably well before the end of the year. I wouldn't be surprised if we get more than one.

I'm very impressed, shall we say, by the enormous commitment of major pharmaceutical companies around the world to developing a vaccine and the progress that's been made so far. There are three completely different approaches that are being taken. Chances are good that at least one of them will come through. And so I'm thinking about how the recovery broadens out and where there's real value.

ANDY SERWER: Hey, Chuck, there's kind of a conventional narrative out there. And you're an old Fed hand, so I get to ask you this question that while the Fed's done a great job, you know, it's conceivably way overstepped its-- well, certainly it's overstepped-- not overstepped. It's gone beyond its traditional mandate, and some say that's an overstep, and working so much in concert with the Treasury and that we're all just addicted to the fed. Now. And I'm wondering what your take is on that.

CHARLES LIEBERMAN: Well, look, the Fed has as its mission to help make sure the economy recovers. It's supposed to step in. And this has been an extraordinary event, so it's not shocking that they would engage in extraordinary activities.

If they didn't do that, I would call them irresponsible. I wasn't a great fan of Powell when he was appointed Fed chair. I'd be a lot more comfortable with an economist. I'm an economist. I think economists should be running the show. I'm only a little bit biased.

But the fact of the matter is he's done a superb job, spectacular job. So my hat's off to Jay Powell. I think he's been great. And he needs to do that, especially with fiscal policy being so embroiled in politics. Republicans and Democrats can't get to any agreement because both of them have one eye or maybe even both eyes out on the election. So that's a real problem. But Powell is the adult in the room trying to make sure that the recovery continues.

RICK NEWMAN: Hey, Chuck, Rick Newman here. So you talked a moment ago about the recovery broadening out. Could you tell us-- just tell us how you see that happening and account for things like a lot of small businesses that could go under, rising default rates, stress on banks, and things like that?

CHARLES LIEBERMAN: Well, we're seeing, for example, that shops are reopening in shopping centers. We look at a whole bunch of those, and they're reporting significant increases in openings in those kinds of operations.

Back in April, I think those numbers were around 60%. Now there are quite a few of those firms reporting 80%, 85%, even 90% reopenings and payment of rents. There may be some turnover. There's certainly going to be a lot of losses in those parts of the economy, but the real estate is still going to be there. And one shop might close, and another one will probably take its place reasonably quickly.

AKIKO FUJITA: Chuck, I want to get back to what you said about the hope of [INAUDIBLE] some vaccine on the market by the end of the year. I know we shouldn't make too much of one headline, but we have seen the market move on any positive news on the vaccine. Why do you think investors just shrugged off the news today from AstraZeneca?

CHARLES LIEBERMAN: Well, it seems like that news wasn't as terrible as it might appear on the surface. There were some unusual circumstances revolving around that single case where there was some side effects. And we do have three completely different approaches to coming up with a vaccine and major companies involved. So my sense of it is that, yes, any piece of bad news is bad news, but this was not a major one.

SEANA SMITH: All right, Chuck Lieberman, great to have you on the show. We hope to have you back soon. Chief investment officer at Advisors Capital Management, thanks for joining us.