Wall Streeter: No Stimulus Package Puts Economy At Risk
Currently, there’s no stimulus bill and no hopes of getting one passed quickly with Senate members on recess until after the Labor Day holiday. With this, Crossmark Global Investments’ Victoria Fernandez worries that the economic recovery is at risk. She says the families who relied on stimulus measures and enhanced unemployment benefits to make ends meet will quickly tighten the purse strings and slow spending due to financial uncertainty.
“If we don’t get that stimulus package coming through and we don’t have additional unemployment insurance for those families that have been relying on that, then I think we are going to see demand (pull) back, that consumption number is going to slow down and that’s where our concern lies,” said Fernandez during an interview with CNBC’s Trading Nation.
The economy is vulnerable or at risk. She says this is because everyone just assumed a new stimulus deal would be finalized before the holiday recess. Now, everyone is forced to reassess their expectations.
“It makes it a little bit more vulnerable for the sheer fact that priced into the market at this point is another stimulus package,” said Fernandez. “Everyone, including myself, anticipated that we would see a package come to fruition prior to the Senate leaving for recess.”
Fernandez has concerns that this uncertainty could lead to a pullback in the markets.
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“There is no deal on the table, and it seems like they are just as far apart now, if not moreso, than they were a week ago, leads to some concern that we could see a little bit of a pullback as some of that uncertainty builds its way through the market.”
All-Time Highs Unlikely for S&P 500
Without a new stimulus deal, she said she doesn’t expect the S&P 500 to break out to new all-time highs.
“We keep bumping up against that 3,386 level,” she noted. “If we don’t get a package that comes through, a stimulus package, then I think we can expect to see a kind of mid to high single digit [percent] pullback.”
Fernandez, who oversees $4.9 billion in assets, says she is trimming her portfolios. She also sells off some stocks that have run higher lately, like Apple and Microsoft.
“You need to have that balance in your portfolio,” she said. “We’re actually trimming a little bit… some of those names that have had such a high run.”
She still likes stocks in certain sectors, and specifically mentioned 5G stocks and cloud-based services.
“We like the 5G and the cloud and the data infrastructure on all those names that we think have longer-term trends built into them because of Covid-19, and what has happened,” said Fernandez.
She also likes Walmart — which reports quarterly results on Tuesday.
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“We’re going into Walmart. I mean a good, solid name, we think, has some advantage with Wal-Mart+ coming online,” Fernandez said.