Yahoo Finance’s Zack Guzman and Akiko Fujita break down the stock market action with Victoria Greene, Victoria Greene, G Squared Private Wealth Founding Partner and Portfolio Manager, and Jeffrey Weiner, Marcum LLP Chairman & CEO.
ZACK GUZMAN: I want to bring on our next market guest here for the hour. Victoria Greene is G Squared Private Wealth founding partner and portfolio manager, along with Jeffrey Weiner, Marcum LLP chairman and CEO. Glad to have you back, sir. Victoria, let's start with you here because, obviously, there's some crazy moves in stocks today.
VICTORIA GREENE: Right? Exactly. Your enthusiasm's a little crazy. Look, I think--
ZACK GUZMAN: How much of that is spilling over?
VICTORIA GREENE: --if there's something to be said, that the power of social media, which we certainly saw through President Trump, is now making its way to Wall Street. And so, you're seeing them move some names that you could struggle to defend the underlying valuations, to say it nicely. But you got to hand it to the Reddit army for bumping it up. I hope everything's on the up and up, and then I hope people look to lock in their gains at some point because anything going up this fast comes down.
But generally, I think the market's just taking a breather. Look, earnings have come in really great. You know, you've seen actually pretty solid beats across the board. You're seeing a little less reward for beats. For instance, Microsoft just crushed it. And they're only up-- I think they were up a percent or so. And they really have had very, very strong earnings.
And then, obviously, all eyes turned to aftermarket today with Apple. Are they going to become the first $100 billion quarter? You know, most likely, they'll beat. You know, is Tesla going to have pretty high thoughts on what their deliveries for 2021 is going to be? And then, where does Facebook come in? Certainly, some big names after the bell today.
AKIKO FUJITA: And Jeffrey, how much of the market action right now you think is actually being driven by fundamentals, i.e. earnings that we've gotten so far. How much of it is really just around fear of missing out?
JEFFREY WEINER: Well, I don't think it's so much the fundamentals, but markets go in cycles. And I think some of these short squeezes are a little bit of the gambling mentality. But there's certainly some momentum investing going on, on the upside and the downside.
But as was just pointed out, earnings are coming in pretty strong. Interest rates remain low. So, by and large, the market looks to be the place where people want to invest money, except for some of these names we've been talking about the last week or so, where you're seeing some unusual movement in the stock for non-financial reasons.
ZACK GUZMAN: Yeah, and I'm glad that you guys pointed out kind of the strength in earnings here, but also maybe not seeing a reward in the share prices. Because, Victoria, Bank of America earlier this week pointed out that that generally has triggered maybe more reason to believe in this rotation away from growth into value. What do you make of that and kind of the expectation that we could see that once we get past maybe the FAANG names reporting?
VICTORIA GREENE: Yeah, I do think there's still a secular rotation towards value from growth. Nothing against some of the big tech growth names. I look at those as that's fantastic, but every time we have profits, we're looking to pull them. I think you have to look at this as a profit cycle and an earnings cycle. And typically, some of your value stocks tend to perform better on early cycle. And they are expected to have higher EPS growth rate.
So I do think you still need to look at value stocks. You still need to look at small caps. You know, I think the bubble's there. But bubbles can persist for years. So are we in a bubble? Absolutely. Is it an imminent fear of being popped? In my opinion, no. You know, with the Fed and easy policy, it could be years that this continues to run. But inevitably, it will bust.
ZACK GUZMAN: Jeff, would you agree with that? Because I mean, you know, we're still waiting for this next stimulus package to come through here, no shortage of reasons as to why it might continue.
JEFFREY WEINER: No, certainly value is always a place to look. But I think people are also looking at the stocks that have been beaten down as a result of the pandemic, whether it's the airlines, whether it's stock like AMC that you mentioned earlier, whether it's hospitality stocks. At some point, they're going to come back. So, you know, Boeing has had its biggest loss ever.
Some of these stocks that have been beaten down will recover. I think people are trying to figure out when the recovery will be and when's the time to get in. People don't like to miss the bottom. And they don't like to get out before the top. So a little bit of market timing is going in to try and figure out when is the right time to invest in these names that are sure to come back. It's only a matter of when.
AKIKO FUJITA: And Victoria, one of the stocks that you have highlighted that you like is Chevron. And I wonder what the play is there. On the one hand, you could certainly argue that demand-- there is more upside in demand as we see the vaccine take hold, the economy start to reopen. And yet, the long-term play certainly doesn't seem like there's significant growth at a time when there are so much focus on the impact on the environment and climate.
VICTORIA GREENE: Certainly, and you're seeing that with the Biden lease freeze. But we look at Chevron. It has a fantastic dividend, one of the best balance sheets, and it's probably the crown jewel in the integrated oil space. Oil and gas isn't going to go away just with a snap of the fingers. Yes, our renewables are going to cut into it, EV and battery.
But if you're looking for value and you're looking for cash flow and you're looking for a good, solid company, Chevron is one of the best. And certainly, we're not agnostic to some of the trends. But if you look at the demand recovery that, say, China experienced as they reopened, we feel confident that they're well-positioned.
Their breakevens are right around 50 on WTI. And so, we think they can make money, and that as some other companies have pivoted more, so your Royal Dutch Shell's or your BP's, towards renewables, Chevron is able to pick up some of that market share potentially. And we think they're well-positioned for the next few years.
Over 30 years, are they going to still be in the Dow? You know, we'll have to see. You know, trends certainly are against oil and gas over the long-term. But that is decades down the road.
AKIKO FUJITA: Jeffrey, you agree? Id Chevron the crown jewel in the energy space?
JEFFREY WEINER: Well, the crown jewel's hard to pick. It's certainly a great company with great potential. But things go in cycles. And the energy space is changing, particularly with renewables and the like. So, also, as a result of the pandemic, people have not been traveling. They haven't been putting gas in their cars. They haven't been putting jet fuel in planes.
So, Chevron is certainly a good company, but-- and I don't think the oil and gas industry is ever going away. But it's a question of how individual companies pivot and become less reliant on fossil fuels. And these are the companies that have the infrastructure in place to develop into other energy sources. So, you know, today it's a good stock. I don't know what tomorrow brings.
AKIKO FUJITA: Jeffrey Weiner, Marcum LLP chairman and CEO, along with Victoria Greene, G Squared Private Wealth founding partner and portfolio manager, our thanks to both of you for joining us today.