Click here to watch the video

Program: Making Money with Charles Payne

Date: 2/5/2021

Station: Fox Business News

CHARLES PAYNE: All right, the market edging higher, on the verge of closing out a magnificent week, emit optimism over massive amounts of money pouring into this economy, greater distribution of vaccine, including that single shot option perhaps real soon from Johnson and Johnson, and strong earnings which ultimately dictate the value of stocks and markets. For more on where we’re going from here and where the big winners might be, I want to bring in Marketgauge Group Managing Director Michelle Schneider, along with a Wealth Enhancement Group, Senior VP Nicole Webb, and Kingsview, Wealth Management CIO, Fox Business contributor Scott Martin.

Michelle I’ll start with you. We got this jobs report this morning. I thought the ugliest part of it was the four hundred thousand decline in labor participation, which, by the way, probably sealed the fate of that one point nine trillion dollar stimulus they’re pushing through anyway. But you take that, you add in more vaccine, the gradual reopening of this economy, and ultimately it looks like the perfect storm for markets. So what are your thoughts on where we go from here?

MICHELLE SCHNEIDER: There’s still a lot of money on the sidelines. We’re getting daily calls from people from every walk of life — how do I get in the market? How do I invest? So we’re really looking at the potential of some kind of blowoff rally that hasn’t happened yet. So there’s a couple of things to look at as a sort of a baseline for warning. And one would be the small caps themselves, which, of course, are making new all time highs today and performing well. The other would be the transportation sector, which has not done as well. Flashed a warning mid-January is now back and bullish, but still has a ways to go to prove itself and has to hold here. That’s the demand side and then the follow up. The next one would be the consumer sector, because right now that too has been lagging, partly because of the GameStop, which is weighted in that basket, but also possibly because we need that consumer demand to come back. So you watch those three areas. If they hold up, I think we’re going much higher.

PAYNE: Nicole.

NICOLE WEBB: Yeah, I mean, I agree with everything Michelle just said, you know, my sentiment remains the same. Rock and roll in twenty-twenty one. It’s a perfect storm Charles. To use your words, and I think we’d be remiss to point out that the Fed is already making one hundred and twenty billion dollars a month in accommodations. The market is addicted. You couple that with their comments that, you know, it’s going to be a blockbuster Q3-Q4. And every central banker has learned from the Great Depression that it’s bad to slow this down to soon we’d rather inflate our way out. And so you look at that and it’s just a lot of wind in the sails in twenty-twenty one.

PAYNE: Hey, Scott, what are your thoughts here? I mean, are we too sanguine about this or is it hard to deny?

SCOTT MARTIN: Well, we are sanguine. I don’t know if it’s too sanguine. I agree with what Michelle said about just the fact that there is a lot of support out there. And Nicole echoed that too. And I think that’s one thing you know, she’s right. I mean, she used the word addiction as far as how the markets have become. And that’s exactly correct. I mean, the markets want stimulus. And so the data, as it gets worse, actually helps markets. Now, the Johnson and Johnson News, dare I say, probably gives the market a shot in the arm because of the fact that we need a little bit more vaccine permeation in this society, Charles. And that’s the one thing that’s kind of holding the markets back from even more all-time highs is getting the vaccine through. But once that happens, I think the markets take off again.

PAYNE: So we’re talking about all this money sloshing around, let’s talk about money going in to markets and how to convey that because U.S. equity ETFs after a midyear reversal was huge. Twenty-twenty tally, one hundred sixty five billion dollars. Want to go back to you, Michel, because there’s an old saying about following the money. So how do these ETF? Is cash going into the market? How does it inform your investing decisions?

SCHNEIDER: Well, we’re really heavily into the small cap growth stocks, that’s where our quants have been putting most of our clients money, 3D printing. Charles, you and I’ve talked about it got close to 50 today, MicroStrategy Clague. So we’ve got EV’s, we’ve got Blockchain. We’re also into some oil, some travel companies and also cannabis, which has been huge. But the big thing is the food commodities and the Agro-Tech that we’ve talked about so hot off the press, we actually got into App-Harvest today. And I think that that’s going to be something explosive. So maybe get in before the Ark-Investment company does and it goes skyrocketing.

PAYNE: Everyone everyone’s trying to beat Cathie Wood at her own game. I was in 3D Systems. I took it off the table. MicroStrategy, so you all know out there, that’s a play on Bitcoin. We’ve had the CEO on the show many, many times. And I just want to get to one of the thing that was least sexy that you mentioned and that maybe, you know, these oil, the oil sector absolutely on fire. We got Baker Hughes laid out a moment ago. Oil rigs up 11 months and 11 weeks in a row. That is absolutely huge for those who are looking for less high flying, big volatile names.

Scott, I thought about you with the silver ETFs also this week because that was the number one ETF. More money flowed into that than we’ve seen in a long time. Your thoughts on that? And gold not necessarily acting the way you would with more inflation talk, just your thoughts on where we are there.

MARTIN: Yeah, look, we like commodities Charles, it’s part of a balanced breakfast, for our portfolio if you will. Just because I think Commodities Act unlike stocks and bonds at times. And as wealth managers, you know, that’s things that we like to have in a portfolio is kind of a side gig to the main course. Now, Silver obviously pushed around a little bit by some of the short crazer’s or whatever you want to call them, the redditors. So that move Silver, probably a little bit more that did bouncing back today and obviously down a couple of days prior. Gold still to us, though, Charles, is a hole. It hasn’t performed as greatly as it did, say, back in two thousand-twenty but just as we go through more of the stimulus, more money printing, money printing, more low interest rate environment, which I think is ahead of us, I still believe that gold and silver are things that you should hold in the portfolio.

PAYNE: All right, folks, I got breaking news for you and the S&P 500. There are 11 sectors, 11 sectors. Guess which one is down? Technology. I mean, this is really amazing. I love the fact that the market could be up Michelle and technology lagging. So what is this telling us, though, in terms of the ability for the broad market to rally and where the money may be shifting? We already talked about oil and energy and some other areas.

SCHNEIDER: Well, I definitely think it’s actually a good thing that big tech isn’t really leading the way because it really means that the true economy is starting to emerge here. And we’ve talked about this, Charles, that big tech I thought – I was sort of a lone voice was kind of the dead money. So really, I think it’s all the new tech stuff that’s coming out, the big data stuff, the Agro-tech we just talk about, the cannabis. All these areas really is where our money is going right now. And commodities to his point before, Scott’s point.

PAYNE: Yeah. And I think that’s a great point. Some of the things that are not in the S&P technology sector are absolutely sizzling the systems as a software, as a systems thing. Some of these other cloud names absolutely sizzling. Nicole, your thoughts?

WEBB: Yeah, I agree with everything you’re saying, but I also think we need to take a look at in the short term, what we already know, what we’ll do well, as the catalyst of reopening continues, what will benefit from steeper yield curve and inflation? And if there’s one place we’re looking at, it’s the smaller cyclicals that will benefit from this broader recovery and benefit quickly. So we’re looking at materials, industrials, manufacturing, travel and leisure. We think it’s time to start moving and rotating back in.

PAYNE: All right. Now, one thing that I don’t think gets enough attention is our earnings, right? It used to be the only thing Wall Street talked about. We’re in the middle of a very robust earnings season. even more importantly ya’ll, all this guidance has been phenomenal. I want to go to you, Scott. You know what? Have you changed anything since this earnings season has begun? Almost every other day, we see forward looking guidance move higher, the consensus moving higher, and we’re seeing some change in leadership.

MARTIN: Everything’s been pretty steady in our large cap growth portfolio, Charles, when you talking about Amazon, Apple, Google, Microsoft, PayPal, to name a few, because it is confirmed, my friend, by those earnings reports. And I’ll tell you what, coming up in the next couple of quarters, I mean, you think earnings are good today, my friends. How about in the next couple of quarters went on some of those companies you’re facing comps that are going to be really easy. So I think this is just beginning kind of this earnings restart earnings revolution as we go into the rest of the year, Charles. So those are the portfolio companies that we’re concentrating on.

PAYNE: All right, any time one says earnings revolution, we end this segment on that, you can’t get better than that. Scott, Nicole, Michelle, thank you all very much. We’ll see you again real soon.