‘I think we’re in a droggy, whatever-it-takes moment’: Peter Tchir

As investors wait on Washington to pass a stimulus bill, some are nervous about what will happen if the U.S. economy doesn’t get a stimulus deal. Head of Macro Strategy at Academy Securities Peter Tchir joins The Final Round panel to discuss.

Video Transcript

JEN ROGERS: Welcome back to "The Final Round," with just about 12 minutes left in the trading session, and then a busy after hour session on tap with results from Netflix and Snap expected. Right now, seem to have consolidated here about halfway up to our highs of the session, but still green arrows across the board. And all 11 sectors right now are in the green as well.

I want to bring in Peter Tchir, head of Macro Strategy at Academy Securities to talk a little bit about stimulus. One of the big words today that we have been-- we're waiting on it. When we heard Pelosi on Bloomberg say we're optimistic, markets cheered that. How important do you think stimulus is? Like, if we don't get it, what happens not on a level, you know, to a person that needs it, because we know there are people out there that need it. But what happens to the market?

PETER TCHIR: I don't think as much happens to the market as happens to the economy. I really think we're in what I've been calling a droggy, whatever-it-takes moment. And you go back to the European crisis. Draghi, I think it was in July, said he would do whatever it takes. He really did nothing for about five or six months. But the markets could not sell off because they knew he was coming.

So I think right now, you have a backdrop where, if we don't get stimulus now, there's some degree of speculation that you would get stimulus between the election and January. And if you don't get it then, you'll get it come January. So I think the market, so long as, one, it believes stimulus is coming, which it feels likely almost no matter the result, and two, the Fed is going to be supportive, the market's not going to sell off.

So I think you have this case where the economy might be weak because I think it's awful not to get the stimulus, but the markets aren't going to react until they believe stimulus is permanently off the table.

JEN ROGERS: Two weeks here until the election. Do you think that people have priced in what the majority of polls are saying is going to happen, even though 2016 seemed to catch everybody by surprise? Is there some risk here that we've priced in a Biden victory that is just not going to happen?

PETER TCHIR: I think there's risk that Wall Street is being a little bit too optimistic, including myself, that we will get through the election, and almost every scenario works out. I think Wall Street tends to get-- it's awkward coming into elections. I think if you go back to 2016, the story was if Trump wins, it was going to be awful for markets. Futures sold off. They were limit down at one point. That turned out to be a silly decision.

So I think over the coming weeks, once the election result comes in, we will really start getting a sense of which policies go through. Taxes could hurt the economy. Corporate taxes could hurt the market, so there's a lot of things that I think are kind of being glossed over right now, as people are comfortable.

For me, I'm sticking to the two main themes, which are stimulus this year, the Fed is here-- and I guess three main themes. The other part is that we are going to have an ongoing friction with China, which helps encourage us to do manufacturing stimulus.

JEN ROGERS: And we have earnings coming out after the bell, Netflix and Snap. Just your thought on earnings generally, or if you had any thoughts on either of those, in terms of the season we've seen and some of the lack of visibility, I feel like, even from companies that have reported pretty good results.

PETER TCHIR: Yeah, I think company investors have got a little ahead of themselves. They're kind of extrapolating what's going on for the last three months, the last six months into the next few years. I think we're going to have a normalization.

One of the things that's been very bizarre to me is, you know, I'm a macro person. We mostly talk macro. Last week, people were talking about individual stocks and options on those individual stocks and what impact they were having on market.

So I think we've started to see this reversal where the NASDAQ 100 has actually underperformed the Russell 2000 by about 10% in the last month. I think that will continue. I think you've got a bunch of these high flying stocks that people love. They're great, great companies.

But I think they're starting to look a bit overvalued, overbought. And there's no new money to come into them. And some of these beaten down sectors I think can do very well. So I'm looking for the have not stocks to kind of come better.

And interesting enough, no one wants to talk about dividend stocks. I think they can do well. And value's been kind of left in the dust. So as a contrarian, that's where I want to start, you know, really loading up, actually, because I do think we're going to get stimulus. I think we're going to see economic growth next year. And those stocks will benefit greatly.

JEN ROGERS: All right, take a second look, or third or fourth, in some cases, look at value. Peter Tchir, Academy Securities Macro Strategy head, great to get a chance to talk with you.

PETER TCHIR: Thanks for having me.