There is a resurgence and people are willing to spend: J.P. Morgan Wealth Management

Liz Weikes, J.P. Morgan Wealth Management Managing Director & Wealth Partner joins the Yahoo Finance Live panel to discuss the latest market action.

Video Transcript

ZACK GUZMAN: I want to shift back over to the markets, though, because, of course, as we learned last year, stocks don't always trade with where the underlying economy is necessarily at. And of course, it's always nice to see the IMF update their growth forecasts and point to the US as one of those markets leading the way. But what does that mean for stocks as we move past Q1?

Joining us now for more on that is Liz Weikes at JP Morgan Wealth Management, managing director and wealth partner. Liz, thanks for taking the time to chat here. I mean, I'm not going to say that the IMF updating growth forecast is bad for stocks. But it all comes down to expectations. And right now, they do seem quite high as we move into earnings season. So how do you see this shaking out relative to that rotation we've been watching over the last few weeks between growth and cyclicals and back and forth?

LIZ WEIKES: Thanks so much for having me today. You know, it's actually funny. When coming on the show today, I was thinking back about the last time I spoke. And it was in the fall. And we were talking all about the fixed income portfolios and where clients were looking to allocate money in 2020. And now today, I mean, it couldn't be far, far different. I mean, we're really, really shifting into the equity markets, despite where valuations are.

I think overall, right now, we really are constructing portfolios that are barbelled. We are using a barbell approach from a secular growth standpoint versus value, right? So on the secular growth side, we are looking, really, at mega tech. And on value, we're really looking to financials as things begin to ease on the COVID lockdowns. And we see-- we continue to see more reopening.

AKIKO FUJITA: On mega tech, what are some of the names you're looking at?

LIZ WEIKES: You know, unfortunately, I can't speak on specific names on air. But overall, we really find that there are certain names that are trading at discounted valuations that we still-- we believe that there's tremendous value in. And we are certainly allocating them to client portfolios.

ZACK GUZMAN: Yeah, Liz, we were just talking a little bit ago about kind of how beaten down some of those names really got. Tesla would be one that jumps out when we looked at, kind of, some of those tech names, Pinterest, some of these other social media companies that got smacked hard. When those jitters around rising yields were there, it might seem to indicate that that could happen again. What might be different if we do see yields rise later in the year? Is the thesis just that investors kind of expect it now or might be more comfortable with it? Or why might that not play out again?

LIZ WEIKES: Yeah, I think you have to look at it both from the actual balance sheet and also from the actual consumer expectation. I mean, I always say I wear two hats, right? As an advisor, but I also am a consumer, right? When you look at names such as Pinterest, right, I mean, that's all driven by consumer interest and what they're looking at overall online. I think overall, I truly believe that there is still tremendous growth in all of these areas.

I think from the reopening standpoint and the dark winter that we've come out of and the spring weather that we're certainly seeing in New York, I think overall, there's a resurgence. And I think people are out there. They're willing to spend. We know certainly in the ultra high net worth space, which my clients fall into, there's a lot of extra cash that hasn't been deployed, based on being in quarantine in the past year. I think you're going to see a tremendous amount of spending going forward. And, you know, it all points for us. We truly believe that this growth is going to continue.

ZACK GUZMAN: I was just looking at the VIX, too, and it looks like we could get down below 17. I mean, I can't remember the last time I saw that. Obviously, it's been a very long year. But when we look at that, Liz, talk to me about what we're expecting to see in terms of volatility here. And we were just kind of having this discussion before about small caps in the Russell potentially having more room to run, a new note from Fundstrat pointing out over on kind of the credit markets and trying to pair that with what we're seeing in equities. I mean, does anything stand out to you there in maybe how investors across both fields might be looking at things?

LIZ WEIKES: Right. I mean, I think from the fixed income standpoint, you came off a shift in 2020 where everybody was looking to put the money into the fixed income markets. When I look at my clients, where you have a multigenerational client base, whether it's millennials and then an older generation, where they're retiring, where retirees may have traditionally put their money into the fixed income-- into the fixed income space, and millennials just typically were not interested in putting money there, that has certainly shifted in the retirees-- from a retiree standpoint. They're looking right now and saying, well, I'm not going to put my money into fixed income. I want to deploy my cash into the equity market.

So I think you're going to see a tremendous amount of volatility continue there. I mean, the shift has been very, very dramatic in such a short period of time. But as rates rise, we're going to continue to see that. Not to say that there isn't an allocation for our clients overall in the fixed income space. However, I think there was a very dramatic shift. And that shift has specifically come from that older generation that typically would have had a greater allocation into fixed income that we're certainly pulling back on.

AKIKO FUJITA: Liz Weikes, managing director and wealth partner at JP Morgan Wealth Management, great to have you on today.