FidelityConnects

Director of Research and Portfolio Manager Joe Overdevest is back for another podcast with equity research analysts Brendan Cochrane and Thomas Goldthorpe.  They discuss what’s next for gold, energy and metals. With oil prices down and gold prices having reached new highs, they analyze the outlook on the long-term trends for these commodities and the impact of various socio-political events such as the U.S. Election and COVID-19. They also note there is a “mixed turbulent outlook” for oil and renewable energy going forward.  But demand continues to grow for oil around the world and it is still a very popular and needed resource even beyond emerging markets.

Recorded on October 6, 2020

In the 8th episode of the Fidelity ETF Exchange - powered by FidelityConnects, co-hosts Étienne Joncas Bouchard and Katrina Wilson take a deep dive into High Quality Factor ETFs. This is the second of a five part series called Factors in Focus. Over the course of the coming weeks, Etienne and Katrina will offer their outlook on various investment factors, describe how they have performed in the past, and most importantly how advisors and investors can incorporate them into their portfolios.

Recorded on October 8, 2020.

Portfolio manager Don Newman shares his outlook on the durability of global businesses at this point of the COVID-19 pandemic and the opportunities that exist for income-focused investors.

Recorded on September 1, 2020.

Jurrien Timmer, Fidelity’s Director of Global Macro, thinks this earnings season will be a good one. Back in the second quarter, expectations at the worst points showed a 46% contraction, but ended up at 31%. Right now, the market is pricing in -21%, but it could be -15% when all is said and done. Jurrien believes that the debates have tipped the scales more decisively towards a blue wave in the U.S. He believes that the anticipated headwinds of taxation and regulation are being offset by expectations of industrial and monetary policy, and that this is behind the rotation we are seeing back into value and small caps over the last two weeks. 

Recorded on October 13, 2020.

Paul Ma, vice president and lead portfolio strategist, and Vivian Hsu, Director, ETFs, discuss how to incorporate ETFs into your portfolio, as well as the pros and cons of different types of portfolios in today’s volatile environment. Paul believes a recession is the best time to buy stocks and “clean the house.” This helps clear the way for healthier companies to come through and show that they can survive. Large-growth companies were able to survive the cleaning and tend to do well early in the cycle, but it’s important to remember that the early stage we are experiencing now is very different from previous cycles and characterized by a lot of uncertainty. Vivian notes that many investors are allocating more than the benchmark to the information technology sector, which has had a tremendous run. She thinks it’s important for investors to consider hedging tech names and future uncertainties. Adding a value factor to a portfolio can help to balance it — a strategy that is often overlooked, because value hasn’t been outperforming the same way growth has.

Recorded on October 2, 2020.

Portfolio managers Alex Gold and Dr. Judith Finegold discuss a second wave of the virus as it hits specific communities, cities, and countries around the globe.  They talk about the implications of the virus on the global health care industry. The vaccine race is front and centre in this discussion as well, as Judith explains how companies who are leading the development of the vaccine will undergo numerous challenges, as some of the vaccine components currently being used in these clinical trials have never been used in this capacity prior and are not approved yet. From an investment standpoint, Alex believes many of these companies have goals to distribute the vaccine on a non-profit basis which may hurt their ability to generate higher revenue levels.  They also discuss areas of healthcare that are investable and the huge rise of telemedicine.

Recorded on September 29, 2020.

Portfolio manager Hyun Sohn discusses the current dynamics of growing tech industries and information technology trends that may carry through to 2021. HyunHo gives his outlook on major industries in the sector, while also looking at the current valuations of some of these major companies. HyunHo tries to find companies with good long-term fundamentals and continued earnings growth that may nevertheless be undervalued in the market. He still likes large-cap Internet companies, such as Amazon and Google, because they have unique business models and their revenues continue to grow. While their price is high, he doesn’t consider their valuations unreasonable. Sometimes companies in this sector can trade at 30 times earnings: HyunHo considers that too high, and that is something he tries to avoid. HyunHo feels positive on tech in the long term because of its fundamentals. Technology is being used increasingly every day by consumers, whether for shopping online, working from home or as a source of entertainment. He thinks the flexibility of working from home will continue post–COVID-19; for these reasons, both from a consumer and corporate perspective, he is bullish on tech.

Recorded on September 25, 2020.

Jurrien Timmer, Director of Global Macro, provides his weekly global macro and markets update. Jurrien notes that the market needs fiscal stimulus to keep up the momentum created by the initial CARES Act. Otherwise, jobless claims will continue to rise, now that employers that previously benefited from the CARES Act are allowed to lay employees off. He believes there are two factors pushing the market today: the president’s condition is improving, and the market is more decisive in its expectations of a blue sweep. The betting odds on the Republicans winning are very low, and the numbers predicting a Democratic win accelerated following the debate on September 29. Historically, a blue sweep has produced below-average results for the stock market over the subsequent two years, presumably because of increased regulation and higher taxes. Today’s focus on massive fiscal stimulus, however, could override concerns about tax increases. The Democrats are also discussing an increase in personal income tax, which could result in tax harvesting. The consequences of this could include inflation and an increase in the money supply, or a rotation from growth to value (especially if tech stocks receive more scrutiny under a Democratic administration).

Recorded on October 5, 2020.

Andrew Marchese, portfolio manager and Fidelity’s Chief Investment Officer, discusses the outlook for Canadian and global markets as we head into the fourth quarter, as well as his insights on the U.S. election, trade tensions, oil prices and a pending COVID-19 vaccine. Regarding inflation, for Andrew the question remains of how to get rid of the debt: whether to grow or inflate our way out of it. Growth becomes challenging without innovation in how we ramp up productivity. That sort of innovation is not showing up in the data, which leaves us with inflation. Andrew’s personal belief is that central banks will always err on the side of inflation, and need to keep rates low. Andrew is quite bullish on Canada as a country; he is positive on education, immigration and innovation themes that he thinks will serve the country well for future generations. However, he would like to see more advancements made to try to keep Canadian (or Canadian-educated) talent in Canada, to grow small businesses and small-to-medium enterprises. 

Recorded on September 30, 2020.

The job of Fidelity’s Asset Allocation Research team is to think “big picture” and long-term, by understanding history and global outlooks. Dirk Hofschire, SVP, Asset Allocation Research, discusses what the team has to say about the election, COVID-19, debt and the stage of the business cycle we are in. Dirk considers the pandemic a more near-term type of phenomenon affecting the business cycle. There was a violent downturn, and then an abrupt upturn as reopening occurred. It would seem we are out of the recession, but still nowhere near previous economic growth. Some sectors (such as services and travel) likely won’t come back until there is a vaccine. There are some positive offsets, however, with people consuming more of certain products.

Recorded on September 24, 2020.