'The timing is not perfect' for Fed to speed up taper, strategist says
The Wealth Consulting Group CIO Jim Worden joins Yahoo Finance Live to discuss the markets' reactions to the Omicron variant and whether the Fed may be making the right choices in their tapering timeline.
Video Transcript
JARED BLIKRE: And we want to keep talking about the markets here with Jim Worden of the Wealth Consulting Group, where he is the CIO-- excuse me. Jim, thank you for joining us here. We've been talking about a lot of the stories of the day. We have the big jobs report on Friday. We also have those Powell comments from yesterday and today that are now being digested, where he's shifting from the labor market concerns about the employment front really to inflation. I'm just wondering how you're making sense of it all.
JIM WORDEN: Yeah, it's interesting what's happening. The timing is not perfect. As you know, we have this new variant of COVID. That comes right at the time where Powell is saying he may taper a little bit quickly and end this QE. So we'll see what happens. I do believe that, you know, the Fed is going to be very, very cautious about how quickly they pull back that QE, that quantitative easing that they have, based on if we do have some implications from this new variant.
ZACK GUZMAN: Yeah, and Jim, I mean, it's hard to think that we're not going to have some. But I mean, we heard from Jay Powell yesterday, and he seemed pretty confident that this isn't going to be as bad as what we saw in 2020 and that, you know, it's time to take away some of the support that was there in the worst of the pandemic and maybe spook the market in terms of how quickly some of that's going to be taken off, as well as a shifting view away from transitory inflation that he sees continuing into mid-next year. I mean, but when you think about that reaction and what we're seeing today, how do you piece together maybe where the market's at in this recovery, whether it was just kind of overdone fear maybe in kind of piecing together all these bits?
JIM WORDEN: Yeah, it's a great point. So the markets don't, as we know, they don't like uncertainty. And so I think there's the pharmaceutical companies and the manufacturers of the vaccines are trying to collect data. And we're seeing also that we had this inflation. We saw oil prices did pull back quite a bit. They're coming back up today.
But I believe that, you know, if we do have even a slight impact from this new variant, that might actually slow some of the inflationary pressures that are out there. I know there's some that believe that it can make it higher. Yeah, we're still going to have some supply chain demand-supply mismatches. But I think that it's not going to have a meaningful impact.
JARED BLIKRE: And Jim, I'm wondering what you're looking for in the month of December, which seasonally, I think 3/4 of all of the Decembers going back to 1950 have been positive. The ones that aren't tend to be notable. We have all this new uncertainty to deal with. How are you navigating this month in your portfolios?
JIM WORDEN: Yeah, that's right. This is a good time, you know, as we know, that consumers make up 2/3 of GDP growth. And this is where we have a lot of holiday spending. I believe that consumers are resilient and they're adaptive. And so even though there's news of this omicron variant, people are going to spend. They may spend less on things if those things are not as available due to the supply chain issues.
But they are going to spend on experiences. They're going to spend on travel. And I think that's going to help. As far as the companies go, earnings are still very, very good for the most part. You know, we're seeing that it's maybe not as good as a couple of quarters ago, but it still looks good. And I do believe that if we do get a little bit of a slowdown due to this new variant, that's just going to push things back into next quarter and make that quarter that much stronger.
ZACK GUZMAN: Yeah, I mean, when we look at maybe some of the VIX reaction here, still holding above 20. And you got, obviously, other indicators. We were talking about the 10-year moves in the last hour. I mean, when you think about which sectors you'd kind of advise clients here or people watching our show here to lean in on at year end, I mean, what do you see as the best way to kind of play some of this volatility and how maybe investors should be reallocating now?
JIM WORDEN: Yeah, I would say what's happening with the sector rotation right now is technology is looking better. We also still like financials. We still like energy, consumer discretionary. So some of these cyclical areas of this reopening trade, if you will, or reflationary trade look attractive. Fundamentals are good. And here's the thing-- valuations are pretty high for a lot of companies. But there's a lot of companies where valuations are really, really low, and they're still far from their pre-COVID levels. And so I believe that we will see value continue to do well, quality. But then also some of the technology names I like as well.
ZACK GUZMAN: Jim Worden, the Wealth Consulting Group CIO, joining us there. Thanks again for the time. Appreciate--
