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The recovery will be 'bumpy' and 'reliant upon stimulus': Weatherly Asset Management President

Carolyn Taylor, President of Weatherly Asset Management, joined The Final Round to discuss how she is navigating this volatile market and what she thinks will have the biggest impact on the economic recovery.

Video Transcript

SEANA SMITH: So for a little bit more on this and also just the broader market action that we're seeing over the last couple of weeks, we want to bring in Carolyn Taylor. She's of Weatherly Asset Management. And Carolyn, let's just start with the president's diagnosis, of course, adding a little bit more uncertainty to the market. But help us understand just the whipsaw action that we saw in the market today and how investors-- how you think investors should be looking at this.

CAROLYN TAYLOR: Well, I would say that 2020 has been a unique year. Today was no different then any other day, except for the fact that we had the diagnosis of the president and the first lady. We have been very focused on our approach to investing in unique opportunities for client planning this year due to the CARES Act and the SECURE Act.

So there has been a huge opportunity with the technology stocks throughout this pandemic and those that have been able to leverage the consumer non-discretionary stocks. So we continue with that incorporated in our schematic approach with clients. We are certainly interested in the pandemic solutions, whether it's the testing, the treatment, or the ultimate vaccinations, but we are taking a broad-based approach that it will continue to be a bumpy recovery that will be also reliant upon stimulus.

SEANA SMITH: And Carolyn, you mentioned that stimulus. I mean, when you take a look at the jobs report today, weaker than expected, do you think this speaks for the need for more stimulus at this point?

CAROLYN TAYLOR: I do think that the stimulus provides a bridge over what is a health pandemic gap. Right now and given the uncertainty and the timing of the solution for the health pandemic, I think it's a wise move to move forward on that so that consumers that are unable, not in the 16 essential sectors, or that are laid off and not yet employed are still able to contribute to the economy during that bridge time.

SEANA SMITH: And when you mention the fact that you're still seeing some investment opportunity in some of those tech names, we mentioned off the top the rotation that we saw a little bit, at least in today's market, some of those cyclical sectors coming into favor. What do you need to see in order for that rotation to stick, in order for you to see opportunity in those sectors?

CAROLYN TAYLOR: You know, we're actually less interested in the cyclical stocks at this juncture. We think it's a little premature. Certainly, if you can stomach the volatility, that is fine. I think what we find most interesting is that many of the trends that were in play prior to the pandemic have been augmented by the trend given technology. So whether it's telehealth, or paperless documentation, or a number of different cloud-based solutions for businesses that need more cybersecurity, a number of those trends we think will stay in place for best practices moving forward. So we're more interested in those area of investment and growth than in some of the cyclical trades at this juncture.

RICK NEWMAN: Hey, Carolyn. Rick Newman here. So back to a stimulus question. It does seem possible that there is no stimulus bill by election day, but once the election's over that it gets a lot easier to push something through Congress and there could either be a pretty meaningful stimulus bill in the lame duck session or, if Democrats would happen to win the White House and the Senate, a very large stimulus bill sometime at the beginning of 2021. Are those the kind of scenarios you're factoring in? And would that be OK for the economy if we just delayed it by a little while?

CAROLYN TAYLOR: Certainly, it would be OK. Would it be desirable? I would say probably not. I'd prefer to see even a smaller stimulus package at this juncture, given the uncertainty of the election, uncertainty in the House and the Senate.

And we've seen other elections, even four years ago, that that being predicted and that being carried out as far as policy and change usually take a bit longer than anyone ever anticipates. And you know, we're near the end of 2020, so will that even impact this year? So there are some planning ideas for this year. And I think the stimulus is better to implement at this point in time, even if it's fairly small.

AKIKO FUJITA: Carolyn, you talk about positioning for some of these reopening trades. I'm curious where you stand on the travel names. You're seeing a big pop in United and American Airlines on some of those comments from House Speaker Nancy Pelosi, essentially saying that there could be some additional aid coming on that front. Is that reason enough to get in on some of these stocks? Or is the long-term outlook, at least in travel, still very much uncertain?

CAROLYN TAYLOR: It's interesting because we've seen many trends during the pandemic and travel going more domestic more by increased purchases of car and deurbanization, so people have augmented their travel, but not that international and that air and business travel. So they've diverted it to other areas, in many cases. I think in many cases that right now it's a little premature for some of the travel-related companies. But it appears as though the stimulus talks are considering some airline help, so that would certainly give a big lift to those companies. Once again, this late in the market cycle, 11 years into a bull market, we don't see the need to incorporate those in our portfolios at this point in time.

SEANA SMITH: All right, Carolyn Taylor of Weatherly Asset Management. Thanks for joining us today.

CAROLYN TAYLOR: Thank you very much. Our pleasure.