Unilever pausing Facebook & Twitter ads for rest of 2020

Consumer goods giant Unilever will halt its U.S. advertising on Facebook and Twitter for the rest of the year. Jimmy Lee, The Wealth Consulting Group CEO joins Akiko Fujita to discuss.

Video Transcript

AKIKO FUJITA: Let's bring in our first guest for the hour. We've got Jimmy Lee, who is the CEO of the Wealth Consulting Group. Jimmy, certainly a lot to go through on this Friday. But let's start with where you were going into today, because you said you expected about a 5% to 10% pullback, given how far ahead the market has run since the March lows. Given what we're hearing today on the coronavirus front and the business or the reopening pause that's now happening in multiple states, does that change your base case?

JIMMY LEE: No, I still think we're going to go through maybe a 5% or 10%, like I said, pullback because the market probably got a little bit ahead of itself. And when everybody was saying that we were going to retest the lows a month or two ago, I didn't buy into that. I think too many people were on that trade.

But you know, are stocks are overvalued? Not all. But did the market go up a little bit too quickly? I think so. So I think the action that we're seeing right now really has been predictable. I don't know how anybody would have expected that we're going to reopen the economy, lots of people eating in restaurants together and so forth, and not have, you know, the infection rates go up. And so until we have a vaccine, I think it's going to be touch and go.

But I don't expect the economy to shut down again fully like it did. I don't think anybody does. So I still see the trend higher in stocks after we get a pullback.

AKIKO FUJITA: What does this do to the economic recovery though, in your view? Because to your point, you know, the performance that we've seen in the markets haven't necessarily equaled what we've seen on the economic front. Certainly, things have been improving in terms of, you know, retail numbers, even the numbers that we got today in terms of consumer spending.

But as we've learned over the last several weeks, this is kind of a stop and go process. Is there better a reality check that's happening today, given the news coming out of Texas?

JIMMY LEE: Sure, I think there is. And really, it's been the government that's buoyed the stock market with all the stimulus and the Fed with its actions as well. And so I think people need to think about that in the long term. And yes, is it going to slow down the recovery as far as economic growth? Absolutely. There's uncertainty there for a while.

But think about what the economy might look like when the virus is gone. And so I think people need to ask themselves that question. How will the stock market react? And of course, we have a lot to go through before that happens before we get a vaccine. So while we have a touch and go on the economy opening, shutting down state by state, that's uncertain. And so I think you would expect a lot more volatility in the stock markets.

And there a lot of reasons for people to take some profits. So if you invested in the lows in March, you might be up a lot. And so on bad news, I would expect some profit taking and some rebalancing going into, you know, the second quarter closing here. So this is not unexpected from that perspective.

But overall, I think that, you know, if you look a couple years out when the virus is gone. I think that the stocks-- many stocks present a lot of value today.

AKIKO FUJITA: Where are you taking profits right now?

JIMMY LEE: Well, we've been rebalancing our portfolios. And what we actually did was, in March, we balanced portfolios into the equity markets, and so selling off some positions in mostly bonds to buy equities. And now as we balance today, we're actually improving some of the positions and going into some sectors that I think have more upside.

And one of those, not sectors, but a theme is companies that are screened for ESG. I think that trend is not going to slow down and continue to gain momentum. And so we have a presence there. And I think those kinds of companies will do well going forward.

AKIKO FUJITA: One of the stocks seeing steep losses today is Facebook, down nearly 7%. It's the worst day since mid-March after Unilever announced that it will pause its ads not just for Facebook but Twitter as well until the rest of the year, saying that it's a polarizing climate right now. You know, that begged the question whether there's going to be some ripple effects.

Now we've got reports that P&G plans to pull ads from platforms with hateful content, which, you know, when you look at where the brands moved likely to include Facebook as well. How should we be looking at some of these growth stocks, especially in social media in light of the broader conversation that's happening on race but also this increased scrutiny on these platforms going into the November election.

JIMMY LEE: I'm not a stock analyst, but I think Facebook will be fine. And I'm sure they'll react accordingly based on what they need to do. Of course, this is big news in the short term. But Facebook, I'm sure, will make the decisions that it has to do well going forward. And with all the, you know, news about companies going more online and closing down their retail stores, it's going to just boost Facebook and other companies' opportunities to sell online.

So I think it's going to be a short-term thing I think they'll do fine. But, you know, our firm, we're not chasing the high growth tech names that are, you know, trading at incredible multiples. I think investors should watch out for that. But tech, I think, as a sector overall though, will still do well.

AKIKO FUJITA: OK, Jimmy Lee's, the CEO of The Wealth Consulting Group. Good to talk to you today.

JIMMY LEE: Thank you.