AND IS DAVID COULD LE CEO AND
CHIEF INVESTMENT STRATEGIST AT
MAIN STATE
CAPITAL MANAGEMENT'S DAVID
GREAT TO HAVE YOU WITH US TODAY
ON
THIS FRIDAY. ANOTHER DOWN DAY
FOR MARKETS TO END THE WEEK BUT
WE SAW THOSE
LOSSES PAIRED IN JUST THE LAST
FEW MINUTES OF TRADE WHAT DO
YOU MAKE OF TODAY'S MARKET
ACTION.
>> IT MAY HAVE BEEN SOME BUYERS
COMING IN LATE A LITTLE BIT OF
BARGAIN HUNTING. IT'S
BEEN A. REALLY A HORDE WEEK FOR
FOR EQUITIES FOR STOCKS THIS
THE MAJOR INDEXES DOWN BETWEEN
5, 7%, ON
THE WEEK. AND KEPT
AN ANOTHER BAD DAY TODAY A
LITTLE BIT OF A COMEBACK AT THE
END OF THE DAY AND YOU KNOW A
LOT OF THE DAMAGE IN THE TECH
STOCKS. THE BIG TECH NAMES.
YOU KNOW LACK OF GUIDANCE AND
EARNINGS RESULTS COMING THROUGH
WERE LOOKED UPON VERY WELL BY
WALL STREET AND WE SAW YOU KNOW
SOME
OF THE THE INTERNET HIGH TECH
NAMES REALLY TAKING SOME BAD
LOSSES TODAY.
>> YAN XU MING OUT YOU KNOW WE
DID SEE THE DOW HAD ITS WORST
MONTH SINCE MARCH. WE ARE YOU
SEEING UNCERTAINTY AROUND THE
ELECTION WE'RE SEEING
CORONAVIRUS INFECTION RATES
RISING IN CERTAIN REGIONS OF
THE UNITED STATES AND
EVEN GLOBALLY WE ARE SEEING
DEFINITELY NO STIMULUS AHEAD OF
THE ELECTION WHICH OF THESE
FACTORS DO YOU THINK IS PUTTING
THE MOST PESSIMISM. INVESTORS
MINDS RIGHT NOW.
>> IT'S REALLY ALL 3 IT'S KIND
OF IT WE LOOK AT THIS
AS YOU KNOW THE MARKET IS
REACHING ARE THE INVESTORS ARE
REACHING MAX UNCERTAINTY YEAR
MAXIMUM UNCERTAINTY ABOUT THE
MARKETS. YOU KNOW WE'VE SEEN
THE VIX. MOVE TO MULTI-MONTH
HIGHS. THE THE VIX INDEX IS IN
TERMS OF VOLATILITY WE'VE SEEN
WHAT'S HAPPENED THIS WEEK BUT
IT REALLY THESE 3 FACTORS HAVE
BEEN WITH US SINCE THE
BEGINNING
OF SEPTEMBER AND THE MARKETS
HAVE BEEN WEEKS SINCE THE
BEGINNING SEPTEMBER WE SAW THAT
THE MARKET HIGHS FROM THE MARCH
LOWS WERE SET AT THE BEGINNING
OF SEPTEMBER AND
WE'VE BEEN VOLATILE AND NOW
DECLINING HERE IN THE LATTER
PART OF OCTOBER ON THOSE 3
THINGS FISCAL STIMULUS IS
NOWHERE TO BE FAIR THEY'VE BEEN
AT IT
CROSSROADS THEY HAVE A BAIL
MAKE A DEAL AND THEY'RE NOT
GOING MAKE THAT DEAL CLEARLY
BEFORE THE ELECTION WERE
WONDERING IF THEY'LL BE ABLE TO
DO IT BEFORE THE END OF THE
YEAR AT
THIS POINT. WE'VE HAD THE
ELECTION IN FRONT OF US THAT'S
BEEN NEXT TURN A LITTLE BIT
NOT ONLY IS A PROBLEM IS IT
ALWAYS IS THE MARKET HATES
THE AND THERE'S THAT
UNCERTAINTY UNTIL WE HAVE AN
ELECTION AND IT'S KNOWN.
YOU KNOW WHAT PLATFORM, WHAT
POLICIES WE CAN PLAN AROUND
THIS IS COMPLICATED IN THIS
PRESIDENTIAL ELECTION CYCLE
BECAUSE WE THINK IT WILL BE A
CLOSE ELECTION IN MAY BE A
CONTESTED ELECTION WHERE IT
GOES BEYOND ELECTION NIGHT FOR
DAYS, MAYBE EVEN WEEKS AND IT
COULD BE A COMPANY WITH PUBLIC
ADDRESS. WHICH WHICH IS VERY
PROBLEMATIC FOR THE MARKETS
AND THEN WE COVID-19 WHICH WE
HAD HOPED MONTHS AGO WOULD BE
SUBSIDING BY NOW IT'S ACTUALLY
BECOMING MORE OF A PROBLEM.
WE HAD 91,000 CASES OVERNIGHT A
NEW SINGLE DAY
HIGH FOR THE UNITED STATES
PROBLEMS IN EUROPE THAT ARE
QUITE BAD. SO YOU
KNOW THAT RUNS THE RISK OF A
DOUBLE DIP RECESSION, YOU'RE A
BABY THAN A DOUBLE DIP
RECESSION HERE IF WE DON'T GET
THE FISCAL STIMULUS THIS NEEDED
SO MUCH SURE THERE IS A LOT OF
REASONS. FOR THE MARKETS TO BE
HAVING THIS KIND OF ANXIETY
THIS KIND OF.
VOLATILITY IS REALLY WAR THAT
AND WE THINK IT CONTINUES INTO
NEXT WEEK.
>> DAVID IF YOU LOOK AT THE
LACK OF CLARITY AROUND FISCAL
STIMULUS AGAIN SOME OF THE
ECONOMIC INDICATORS THAT WE'VE
GOTTEN IN JUST
THE LAST A FEW DAYS FOR
EXAMPLE, 3RD QUARTER GDP
NUMBERS POINT TO GROWTH RATE
AND IN US GROWTH RATE OF 33
PLUS PERCENT
WHICH WAS YOU KNOW HIGHER THAN
EXPECTED, ALTHOUGH WE DID SEE A
DECLINE OF 31% IN THE 2ND
QUARTER WE ALSO SAW WEEKLY
JOBLESS CLAIMS
THAT WAS LOWER THAN EXPECTED
WHAT
DO THESE MACRO FACTORS TELL YOU
AGAINST A LACK OF STIMULUS AS
FAR AS HOW LONG THE ECONOMIC
RECOVERY IS ACTUALLY GOING TO
BE ON THE OTHER END.
>> WELL YOU KNOW WHEN YOU HEAR
THAT NUMBER WE'RE USED TO
HEARING NUMBER OF ONE 0.7% AND
2.3% AND THEN YOU YOU HEAR A
NUMBER LIKE 31 OR 32 PER SENATE
IT JUST IT JUST SOUNDS
SO BIZARRE ARE YOU KNOW THE
NUMBERS ALMOST HAVE NO MEANING
AND REALLY IT'S JUST A
REACTION TO HOW MUCH WE DID
DECLINE IN THE 2ND QUARTER THE
END OF THE 1ST QUARTER AND IN
THE 2ND QUARTER SO
IT WHAT WE KNOW
IS THAT THE FIRST PART OF THE
RECOVERY, THE FIRST 3 QUARTERS,
THE RECOVERY. IT IS MAY BE
UNDER OUR BELT AND THAT'S AGAIN
IT'S DIFFERENT PARTS OF THE
ECONOMY HAVE RECOVERED WELL
SOME PARTS OF THE ECONOMY HAVE
NOT RECOVERED NEARLY AS MUCH.
IT'S BEEN
BY 4 CADE RECOVERY IN THE
ECONOMY BECAUSE OF HOW COVID
HAS AFFECTED DIFFERENT
INDUSTRIES AND AS WE
LOOK FOR WORD NOW EVEN THOSE
OCON EVEN IN THOSE PARTS AND
RECOVERED QUITE
WELL THAT LAST 10 OR 20% IS
GOING TO BE MORE DIFFICULT IN
ITS COVID CONTINUES THIS
RESURGENCE THIS WHETHER IT'S A
SECOND WAVE 3RD WAVE OR JUST A
NEW WAVE.
THAT COULD REALLY COMPLICATE
THE REST OF THE REBOUND BACK
NORMAL LEVELS OR OR AT
HISTORICAL LEVELS EXPANDING
ECONOMY OR WHAT WHERE WE'D LIKE
TO SEE THE CAR I NORMAL
EXPANSION MODE VERSUS WHERE
WE'VE BEEN.
>> DAVID I DO WANT TO BRING UP
THE FACT THAT THE NASDAQ IS
ACTUALLY CLOSE TO CORRECTION
TERRITORY. IT CLOSE TO 10%
BELOW ITS
ALL-TIME HIGHS.
>> TECH HEAVY INDEX WE'VE BEEN
SEEING BIG
TECH NAMES. IMPACT MARKETS, AN
OUTSIZE FASHION WHETHER IT'S ON
THE UPSIDE OR
THE DOWNSIDE SHOULD WE BE
READING INTO THIS THE FACT THAT
WE ARE CLOSE TO CORRECTION
TERRITORY LEVEL FOR THE NASDAQ
AND WHAT DOES THIS DO
PSYCHOLOGICALLY FOR INVESTOR
SENTIMENT OVERALL.
>> YEAH WE HAD THE YOU KNOW THE
FIRST BOUT OF THIS IN EARLY
SEPTEMBER REALLY THE FIRST 2
WEEKS OF SEPTEMBER. WE DID GET
A CORRECTION IN THE NET FROM
PEAK TO TROUGH WE WERE DOWN
11%. WE WE YOU KNOW RALLY BACK
HERE AT THE INNOCENT TIMBER AND
EARLY OCTOBER
FOR 4. ALL THE INDEXES WERE
HERE WE ARE AND NEAR
CORRECTION TERRITORY. SO I
THINK IT IS WE EXPECT AND WE'VE
REALLY BEEN DE RISKING OUR
PORTFOLIOS OUR CLIENT PORTFOLIO
SINCE THE BEGINNING OF
SEPTEMBER BECAUSE OF THESE 3
FACTORS, PRIMARILY THE
ELECTION. IN THE CYCLE WE'RE
ENTERING INTO COMPLICATED BY
THE OTHER 2 FACTORS THAT
HAVEN'T BEEN RESOLVED. JUST
WHAT WE DON'T HAVE FISCAL
STIMULUS WE DON'T HAVE THAT
SECOND DEAL FOR COVID-19
RELIEF. THAT PROVIDES A FISCAL
STIMULUS THE
ECONOMY NEEDS AND COVID IS IS
GETTING WORSE. WE HAVE THOSE 2
FACTORS COMPLICATING THE
PRESIDENTIAL ELECTION CYCLE.
IT NET, WE KNOW GIVES THE
MARKETS. VOLATILITY AND NOTHING
COULD BE WORSE. THIS YEAR
EVEN PASSING SO YOU KNOW WE'RE
EXPECTING THAT KIND OF
VOLATILITY BUT WHEN WE'RE
TALKING ABOUT TECHNOLOGY.
IT IS A SECTOR WE'RE GOING TO
STAY WITH US IN IN THE EVENT OF
MORE ECONOMIC. PROBLEMS
OR MORE. THEY ECONOMIC
CONTRACTION WE DON'T WANT TO BE
IN THE VALUE ORIENTED SECTORS
WE DON'T WANT TO BE IN
CYCLICALS WE WANT THOSE SECULAR
GROWTH STORIES. LIKE THE TECH
SECTOR. THOSE WHAT DID WELL.
EARLIER IN THE YEAR AND WILL
CONTINUE TO DO WELL AND THOSE
REALLY ARE MULTI YEAR SECULAR
GROWTH STORIES
LEADERSHIP NAMES THAT WE WILL
CONTINUE TO STAY WITH EVEN
ATTACKED LAST UNALLOCATED ERS
THOSE ARE ANCHOR POSITIONS IN
OUR PORTFOLIOS.
>> AND DAVID FOR SOME OF THOSE
BIG TECH NAMES THAT YOU ALLUDED
TO WE SAW EARNINGS THIS WEEK
FROM ALPHABET
FACEBOOK AMAZON YOU NAME IT
THAT THE RESULTS WERE MIXED BUT
LARGELY INVESTORS WERE PRETTY
DISAPPOINTED TODAY AFTER THE
BIG
EARNINGS YESTERDAY. REVENUE
WASN'T ROBUST ENOUGH USER
GROWTH WAS A ROBUST ENOUGH FOR
SOME OF THESE SOCIAL PLATFORMS,
ESPECIALLY COSTS REALLY HIGH
FOR AMAZON IN TRYING TO DEAL
WITH
COVID-19. WHAT ARE YOU LOOKING
TOWARDS AS THE FUEL THE GROWTH
FOR THESE COMPANIES GET
THAT INVESTORS SEEM TO HAVE
BEEN QUITE PESSIMISTIC AND WHAT
WENT ON IN THIS LATEST QUARTER.
>> YEAH, I MEAN THERE'S SOME A
SIZABLE CAUSES WE KNOW YOU KNOW
IT'S APPLE. YOU KNOW THERE WAS
A SIZABLE CAUSE AN IPHONE
PROBLEMS THERE. YOU KNOW WE
SAW EARLY A VERY BAD DAY FOR
TWITTER STOCK TODAY. GOOGLE
QUITE A
BIT BETTER. YOU KNOW WE'VE GOT
SOME MIXED RESULTS IN THERE AND
WE'RE GOING TO HAVE QUARTER
QUARTER. ISSUES LIKE THIS BUT.
YOU KNOW IN THEIR APPLE GOOGLE
THE FANG STOCKS A LOT OF THOSE
BIG.
BIG CAP TECH NAMES ARE EXACTLY
THE NAMES THAT WE DO.
WANT TO BE STAYING WITHIN OUR
PORTFOLIO GOING FORWARD.
WE WILL BE
HOLDING THOSE AND WE WILL BE
BUYING MORE THOSE ON DEBTS WILL
BE WHY BUY MORE OF THOSE NAMES
ON DEPP'S AS WE
GET OPPORTUNITY.
>> IT SOUNDS LIKE YOU ARE OVER
WAITING GROWTH OVER VALUES, YOU
KIND OF EXPLAIN WHY THAT IS BUT
HOW LONG DO YOU INTEND THAT TO
BE OR DO YOU PLAN FOR THAT TO
BE YOUR STRATEGY.
>> YEAH, IT'S INTERESTING WE WE
HAVE A CHART THAT WE UPDATE
THAT SHOWS THE OUTPERFORMS OF
GROWTH OVER VALUE AND OVER THE
PAST 3 AND A
HALF YEARS. THAT'S HOW LONG
WE'VE BEEN UPDATING IT WE'RE
NOW A
223%. OUTPERFORMS OF GROWTH
OVER VALUE OVER THE PAST 3 AND
A HALF YEARS IN THE 2ND
QUARTER. EVEN WHEN VALUE
STARTED TO SHINE
IN THERE FROM THE BEAR MARKET
LOWS THAT WAS STILL.
THE BEST QUARTER EVER FOR THE
RUSSELL 1000 GROWTH
IT WE
MAYBE NOT A PERMANENT CHANGE
BUT IT'S MORE ABOUT WHAT'S
HAPPENING TO OUR ECONOMY AND
HOW IT'S TRANSFORMED WE HAVE
A SAYING MANY PEOPLE HAVE SAID
THIS TECH IS EATING THE WORLD.
EXAMPLES WE LIKE TO USE IS
IS AMAZON. YOU DON'T WANT TO
WAKE UP IN THE MORNING AND FIND
OUT THAT JEFF BEZOS HAS DECIDED
TO ENTER
YOUR INDUSTRY. AND REALLY
THAT'S WHAT'S HAPPENING.
YOU KNOW TECHNOLOGY IS
DISRUPTING A LOT
OF INDUSTRIES AND CHANGING THE
WAY WE DO A LOT OF THE THE
CHARTER NETWORK IS A GOOD EXAM.
ALL THAT AND YOU KNOW AS WE AS
WE LOOK FORWARD INTO THE FUTURE
AND LOOK AT HOW MUCH TECHNOLOGY
HAS CHANGED EVERYTHING WE DO
YOU KNOW THESE ARE THE SECULAR
GROWTH STORY IS THAT THAT
INVESTORS SHOULD BE
INVESTING IN. YOUNG PEOPLE KNOW
THAT THE BEST IN ENTERTAINING
ADVANTAGE OF THAT SO
I THINK THAT GROWTH IS
CONTINUES TO OUTPERFORM VALUE
BECAUSE THE WORLD HAS CHANGED
AND I THINK THAT WILL CONTINUE
TO SEE GROWTH
PERFORM VALUE VALUE HAVE ITS
BRIEF PERIODS ABOUT
PERFORMANCE.
BUT OVERALL GROWTH
CONTINUES TO APPLE OUTPERFORM
VALUE OVER TIME I THINK THAT
JUST CONTINUES TO BE THE THEME.