Ted Oakley, Oxbow Advisors Managing Partner, joins Yahoo Finance's Kristin Myers to discuss the market outlook amid election uncertainty, COVID-19 concerns.
KRISTIN MYERS: Let's talk markets right now. All three major indices are in the green. So to talk market outlook right now, let's bring on Ted Oakley, Oxbow Advisors managing partner.
Ted, thank you so much for joining us again. It's been a bit of time since we last talked. I want to start first on stimulus. We've been chatting it throughout today's show.
Again, we've been seeing a lot of back and forth on stimulus from the White House, from the Democrats, just in the last couple of days. I'm wondering, from your perspective, how are investors meant to trade through this period of uncertainty that is being manufactured by the president right now?
TED OAKLEY: Well, I think they've got to keep their eye, Kristin, on the fundamentals of what they're trying to buy or own at this time-- or sell, for that matter. But, you know, one of the things on the stimulus side is that, you know, there will-- there has to be an end at some point. You can't come in every three months and push out 2 trillion bucks.
And so I think people lose sight of that, that, you know, whether this one happens or you have one more or two more, at some point in time, you know, you've got to row your boat yourself. And I think that's what we're really missing in this whole thing.
KRISTIN MYERS: So to that point then, you have to row your boat yourself. The economy relying a lot on the consumer. We are seeing personal incomes down.
And as we're seeing, stimulus doesn't seem to be a certainty anymore. And we're heading into the holiday season. Wondering what you might be expecting over the next few months. How should investors be thinking about the end of the year?
TED OAKLEY: Well, Kristin, I think one of the things you'll notice on that note that you just said is that personal savings has really soared over the last three or four months. And I think a lot of people that received money or people that have money have just decided, you know, I think I'm going to hoard some of that cash for the time being.
Now how it plays out in the season, in the holiday season, I don't really know as far as the shopping side goes. I think people still are consuming, but it's certainly slowed down. If you look at the demand side and the supply side of GDP, they're both declining right now.
And so it's really hard to tell. I think people get in the-- you know, they get in the season. And sometimes they fool you. But I can't really have an opinion on that because it's too early to tell.
KRISTIN MYERS: Do you think that there might be any catalysts out there to help the markets break through to the upside?
TED OAKLEY: You know, I do not. One of the things you have working right now is a synthetic market. It's synthetic in that the Fed set it up this way. And I think people are sort of-- you know, they basically are kidding themselves that there's fundamentals underneath it, but there really isn't.
I mean, we're in a very, very expensive market. And I know a lot of people will say, hey, there's a lot of cash, et cetera. However, it's all synthetic. There's nothing really real about all of it. And at some point in time, that probably comes back in. But you would have to have more synthetic market, more-- you know, to make the market go higher here. I don't see that, but it could, I suppose.
KRISTIN MYERS: So to that point, if we're in a synthetic market right now, when do we start to see the bottom start to fall out? Is it around election time? I mean, when are we going to see that happen?
TED OAKLEY: You know, I would guess that you're closer to a downside break in the market than an upside. And by that, I mean, OK, if I thought the upside was 2% and the downside was 15% or 20%, those are not the kinds of things in a market set-up I like to have.
Now we have certain companies that look OK, but in a market setup, that's something we would look at. But, you know, the first year of any administration is the worst year in the four-year cycle. So I would guess that if you don't get some weakness in the fourth quarter, you will get some weakness in the first year, which would be '21.
KRISTIN MYERS: I only have time for one more with you, Ted. But I want to ask about the rotation that we're seeing in the market, rotation to cyclicals, the rotation to value. We have, however, seen tech leading the gains. If investors start to do that, really start to look more towards value instead of growth, I mean, are they not going to be leaving a whole lot of money on the table?
TED OAKLEY: I think so, Kristin. I think one of the things that happens is Wall Street tends to follow each other. So when you have a few strategists come out and say, hey, we need to shift, we got a shift over here to do the rotation shift into cyclicals, all of a sudden, they feel like they have to do the same things.
I personally think it's, you know, it's a sucker punch here on that side. And so I wouldn't be doing that, but I think investors-- again, look at the certain companies you want to take, and make sure you own the right stuff.
KRISTIN MYERS: All right, we'll leave that there. Ted Oakley, Oxbow Advisors managing partner, always good to chat with you. Thanks for joining us today.
TED OAKLEY: Thanks, Kristin.