Oppenheimer Asset Management’s John Stoltzfus is now looking to add stocks to his portfolio — just two months after warning investors there was no escape from the coronavirus fallout.
But, its earnings season, which means it’s gambling time.
On Monday, the firm’s chief investment strategist told CNBC’s Trading Nation, “[The earnings season] is going to show us winners and losers within the sectors — companies that may be positioned to weather this better.”
Recall that Stoltzfus warned investors in late February that there was nowhere to run once coronavirus infections start spreading beyond China. But, he also advised everyone to start jotting down well-managed companies they’d like to buy at cheaper prices.
Now, he believes a bull market is “somewhere in the distance,” and he’s taking steps to capitalize on it. His current list has more than two dozen names on it.
“It’s not a huge list, but it’s a shopping list of companies that we would like to add to positions that we already hold,” he added.
“For some of them [we] opened new positions. Things that might have gotten away.”
Stoltzfus speculates that utilities, in particular, could help boost everyone’s portfolios. Interestingly enough, it’s a group he was avoiding earlier this year.
Looking Into The Future
Stock futures rose in Monday’s overnight trading as investors are bracing for what could be an ugly earnings period. Futures on the Dow Jones Industrial Average rose 256 points, pointing to a Tuesday opening gain of about 289 points. The S&P 500 and Nasdaq futures were also on an upward streak.
Earnings season is set to kick off on Tuesday with JPMorgan Chase, Wells Fargo and Johnson & Johnson reporting numbers in the morning. The first batch of results will give investors a sense of how devastating the hit to other corporations could be from the pandemic.
Analysts expect S&P 500 earnings growth to decline 10.2% in the first quarter year-over-year, according to Refinitiv. There is also an unusually wide range of estimates given the unprecedented uncertainty from the coronavirus.
“Even the lowered forecast may prove optimistic given some analysts have not adjusted numbers since mid-March in response to the lockdowns in many major cities throughout the country,” said Jeff Buchbinder, an equity strategist for LPL Financial.
Morgan Stanley’s Analyst Team Changes Perspective After Federal Reserve’s Actions
Prominent Morgan Stanley analyst Michael Wilson is getting more bullish about stocks.
In a Monday research note, Morgan Stanley’s chief U.S. equity strategist and their team doubled down on their enthusiasm for equities. This was not the case before, as everyone feared the aftermath of the pandemic.
The Morgan Stanley team says that they have grown more optimistic because of the seemingly unfettered support from the Federal Reserve. Last week, they set up new loan programs, including offers to purchase high-yield bonds and bolster existing ones.
“Don’t fight the Fed. The Fed surprised again last week, this time offering up to $2.3 trillion in loan support while moving further down the quality curve with their secondary market purchases pushing into high yield,” wrote Wilson and his research team, “This move is in-line with our prior view that investors should have no doubt about the Fed’s resolve to do whatever it takes to make sure the recession does not turn into a depression.”