AdvisorShares CEO Noah Hamman joined Yahoo Finance to share where he sees opportunity in the stock market headed into the summer.
SEANA SMITH: And Adam, we made it to Friday. But it's been a bit of a rough week when you take a look at the market's performance. The Dow once again under pressure today, off 447 points with 60 minutes to go in the trading day. It's the fifth day that the major average has been lower. And it's on track for its worst week since January. Today, Goldman, Intel, and Walgreens are the worst performers in the Dow.
Let's talk about the recent performance that we've seen. And we want to bring in Noah Hamman. He's the CEO of AdvisorShares. And Noah, I guess just starting with the selloff that we've seen this week, obviously, investors a little bit spooked by what we've heard from Jay Powell on Wednesday. How are you looking at those developments? And is this a bit of an overreaction?
NOAH HAMMAN: It feels like it might be, right? The economy's starting to open back up. I mean, they did say they might have to take some action later on down the road. But it seemed like it was a talk about talking about doing things. So the market does seem to have overreacted a little bit to it. But we're definitely focused in on areas that will take advantage as the US continues to open up.
ADAM SHAPIRO: So when you talk about taking advantage of areas when the US opens up, what about overseas? There was a lot of talk about emerging markets being a place to go. But now there's concerns about third spikes, fourth spikes of COVID perhaps diminishing that. What's your take?
NOAH HAMMAN: I would definitely be concerned about that. Right now, we're focused on the US. So in all the areas that are going to benefit from reopening, whether it's restaurants, hotels, airlines-- you want the airlines, like Southwest Airlines, that's more of a domestic focus. For international, we feel like there's going to be a few more challenges, even though countries here and there have done better jobs, say, than others, than their neighbors right next to them. But we think the international markets and especially the emerging markets will be a little bit slower to open up.
SEANA SMITH: You mentioned hotels, restaurants, and airlines. We've already seen a bit of a rebound in many of those names since the start of the year. How are you picking the ones that still look attractive right now?
NOAH HAMMAN: Sure. Well, we think the earnings opportunities are there from two aspects, where they have the opportunity to change their prices. You saw that with Chipotle. So in our restaurants ETF, the ticker symbol for that is EATZ. It's a great example of, even though this industry's cost might go up, their revenues can also go up.
And you see that across the board. Hotels will be the same thing. They can adjust their prices a little bit with this increasing demand. So we think it's going to continue to grow and continue to increase the numbers in both of those categories.
ADAM SHAPIRO: When we talk about restaurants, and you talk about RCI hospitality as well as Cheesecake Factory, with the issues facing commercial real estate, will the large chain restaurant groups be able to renegotiate leases that would be to their benefit and, ultimately, to the shareholders' benefit?
NOAH HAMMAN: I think so. And I think, unfortunately, that maybe comes at the disadvantage of small, independent businesses. The ones like you mentioned that we have in our portfolio are public companies and access to capital markets. So I think they will be able to do exactly what you described, get better deals, have access to capital, and maybe take a little bit of market share while the independent, small businesses continue to fight to get their businesses back open.
SEANA SMITH: Noah, we've seen some strength in US dollar, once again moving to the upside today when you take a look at the dollar index. Do you see this being a headwind here for US equities and particularly some of the names that you just went through?
NOAH HAMMAN: I think so. I think the changes that we see there won't really make a big impact to these companies, though when we talked about the ones that have a bit more of a global reach-- so when you think about the hotel category, a Hyatt or a Marriott, that starts to impact them a little bit more. But trying to stay focused in the US, the changes there in these categories and these industries I don't see making too big of an impact.
ADAM SHAPIRO: So very quickly, I just wanted to ask you too about the massive amount of money Americans have saved and whether it's the top income echelon that saved the most. Will we see that money being deployed, or will people hold onto it, afraid that they could get burned with a potential another setback?
NOAH HAMMAN: My impression is they're going to try to spend it. I had saw some statistics previously. But it was across the board, the savings rate had increased in all of the categories, in various amounts, of course. But yeah, the idea is that that money is sitting in the bank and probably ready to be spent. And it's still probably not going to be spent on big, global travel, maybe more extravagant trips, but local things, Disney, getting out to eat, staying somewhere else as opposed to the house you've been cooped up in for the last year and a half. We think that money is going to be spent. You're going to see a lot of it spent here in the US.
SEANA SMITH: Noah, the speed of the reopening so far, has it been meeting your expectations, exceeding them? Where do things stand?
NOAH HAMMAN: I think it's fair to say meeting my expectations. I'm not really sure what my expectations were. I've been able to see it slowly but surely. As a parent and taking my kids out to soccer practice, you just notice things, whether it's traffic and how that's increased over time.
We drove by a couple of pools on the way home last night, cars out front all over the place. And it really felt like things were progressing. But still, when you go into some stores, you're still trying to figure out which ones you need to wear a mask in and which ones you don't. So we're not quite there yet, obviously. But things are progressing. I wish they would have progressed a lot faster than they did. But certainly happy to be where we are right now.
ADAM SHAPIRO: Noah Hamman, AdvisorShares CEO, thank you so much for your insight. I know a lot of investors are hearing what we're talking about.