Stocks drop after disappointing jobs report

AdvisorShares CEO Noah Hamman joins Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Heidi Chung to discuss how the markets are faring amid the coronavirus outbreak.

Video Transcript

BRIAN SOZZI: I'm going bring in Noah Hamman, AdvisorShares CEO. Noah, always good to see you here. Pretty brutal jobs report. Now you're seeing the market come under pressure. What do you think the market's mood or reaction could be to this report looking out over the next week?

NOAH HAMMAN: Probably negative. And I think negative for a while. It'll be challenging numbers, probably more challenging numbers ahead. I think companies have been trying where they can to keep employees, hold off on letting them go, hold off on furloughing them. But as those numbers start to pick up, this is probably just the beginning of bad numbers.

ALEXIS CHRISTOFOROUS: And Noah, what about the stimulus package before us? When are we going to need a fourth? Are we going to need a fourth? I mean, already, House Speaker Nancy Pelosi coming out this morning and saying the small business loans, that $350 billion in the stimulus package, is not going to be enough.

NOAH HAMMAN: Right. Unfortunately, she's probably right. It's just a matter of where that money goes. These early dollars are going-- and you've seen them prop up the credit markets. You saw the reaction in the bond market. That's been very helpful. Kind of this second wave, the $2 trillion added onto the $4 trillion that's going out to small businesses. That's still going to take a while to be implemented. And then probably more is needed. I know there was some talk earlier this week or last week about maybe infrastructure spending, where those dollars could go. So I think more money's probably getting pumped into the economy that can help build things back up and get us back on track.

BRIAN SOZZI: Noah, what do you like here?

NOAH HAMMAN: It's a tough call. I think it is the time for active management. We have actively managed exchange traded funds, so we're a bit biased when we say that. But we think the sectors and the stocks are going to matter. I think the leisure space is going to be challenged for a while. I think health care, even though it's challenged right now, that's going to be an area of growth. Manufacturing is going to be an area of growth. They'll look for those companies to reinvest capital in the new manufacturing process.

I think I might have mentioned tech, but certainly tech is going to be a place to be. And you can maybe see a rebound in the energy space. Energy has been bad for a while, not just this past few weeks. I think year to date, it's down around close to 50%. But over the course of the year, it's actually down 50%. It's been tough for a while. We like that area to rebound as well over the course of the rest of the year.

HEIDI CHUNG: Hi, Noah. It's Heidi Chung here. I like that you touched on energy, because that has been such a big topic over the past couple of weeks and months. That being said, though, it's been such a bad sector to be in. Like you just mentioned, it's down 50% or so. I've never seen the market react so strongly to oil in such a long time since we saw the market react like it did yesterday. Oil was the big story. But I mean, where do you see oil going from here? And as an investor, if you're exposed to energy stocks, do you stay in those names?

NOAH HAMMAN: I think if you're still in it, you probably do stay in those names. And you start to dollar cost average to the extent that you believe in the sector. If you think there's another 10% or 20% down in that sector, you get out. But I don't know that that's the case. I think you start dollar cost averaging into that space. Will it get to be as high as it used to be? I don't know. I mean, remember that being down for the whole year I think is in part to what we had going on in the United States and in North America with fracking.

And as that technology starts to branch out to other countries and they can start to produce oil as efficiently as we've been able to and become net exporters, I think that's a pricing pressure globally. But it doesn't mean that that space won't grow. So we do like it throughout the rest of the year. If you're in it, I'd probably start adding to that position a little bit.

ALEXIS CHRISTOFOROUS: And what about, Noah, outside of US equities? Are you looking at Europe? Are there opportunities there? Dare we say emerging markets? We actually had somebody on the show-- I think was earlier this week-- who said when when you start to see the market make a bottom and come out of this, emerging markets are going to be leading the way.

NOAH HAMMAN: Yeah, I definitely, probably a month ago, would have said, that's probably where I'm going to overweight, as compared to maybe to the US. We've got a lot of work to do to dig out. And again, I should say that I mean that from a stock market and investing perspective. I think we're going to get the economy back on track, but it doesn't mean the stock market's going to go back to where it was before. I'm a little nervous about emerging markets, only because I just would like to get more clarity around the virus and how it's moving around the globe.

But I do think there are opportunities for growth there. I think you look at countries, especially when you think of the manufacturing and the supply chain issues that we're going through right now, think about the countries who could help support that, that are good partners for the United States. I think you can find some opportunity there in your portfolio and probably a little bit stronger than what you'll see, again, from a stock market perspective in the US, even though I know our economy will come back.

BRIAN SOZZI: Noah, we've had several folks on today voice concern about a second wave in coronavirus infections in China, in the US as well. Do you think that's priced into the markets?

NOAH HAMMAN: I don't. I was actually just speaking to one of our board members of our ETF trust who's based in Atlanta, Georgia. And his spouse actually works for a hospital there in Atlanta. And he is describing what they're seeing in the state. And so they're in the early stages of it. And so I think if you just look at the United States alone, it hasn't stopped growing in areas where it's about to start. I hope-- I'm praying that you have cities like New York or the West Coast that are maybe kind of topping out and on the down slope. But you probably have areas like Florida and Georgia that maybe are just getting started. So I'm nervous for the market. We're hedging our portfolio. We're cautious for a while until we can see more certainty, not only in the US, but as you point out, making sure things don't flare back up in places that we thought were contained.

ALEXIS CHRISTOFOROUS: I want to get back to oil for a minute here, Noah, because we know that OPEC plus is asking for this virtual meeting now to take place next week. How optimistic are you that that could actually result in production cuts at this point and an end to this price war between Saudi Arabia and Russia?

NOAH HAMMAN: I'm optimistic. I think they ultimately want to see the prices go higher. They've got to work out an agreement or some type of negotiation. But nobody benefits from where it's at right now. And I think they've got to understand that. I think the virus exacerbates that. I hope everyone is raising the white flag for now as they meet and discuss. And maybe in two years, if they want to start fighting it out again, they're more than welcome to. But I hope it's one of those things where smarter and cooler heads prevail. It's one of those things where they do have control over fixing what's going on in that energy space. I'm optimistic they'll see the bigger picture of what's going on and come to a good resolution.

BRIAN SOZZI: All right, let's leave it there. Noah Hammon, AdvisorShares CEO. Always appreciate you hopping on. Stay safe out there.

NOAH HAMMAN: Thank you. You, too.