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'We’re not tilting necessarily to growth or value': Huntington Private Bank's Chad Oviatt

Huntington Private Bank Director of Investment Management Chad Oviatt and The Bahnsen Group Chief Investment Officer David Bahnsen join Yahoo Finance Live to discuss the latest market action.

Video transcript

ZACK GUZMAN: Of course, as all of this is playing out and all the excitement is there clearly on the crypto side, there is, of course, earnings right now to pay attention to from some of those more boring traditional companies. Oh, just the big banks that we'd be covering here. And we've gotten beat after beat after beat to kick off earnings season here. The latest, Morgan Stanley out today, again beating expectations. That's something we've been talking about and setting us up for a very exciting quarter of earnings still to come in here.

And for more on that, I want to bring on our two market guests to discuss all that with us. David Bahnsen, the Bahnsen Group chief investment officer, joins us right now, alongside Chad Oviatt, Huntington Private Bank director of investment management. And David, why don't we start with you? Because we have been talking a lot about kind of the expectations right now on Wall Street. And if anything has been proven out so far, it seems like they might be low still. But it might be a little bit of hesitance, I think, on the part of analysts to raise expectations beyond where they're at. So how do you see earnings season going, given the strength we've seen from the bank so far?

DAVID BAHNSEN: I think it's going to have a lot more to do with forward guidance for the remainder of earnings season. Because you really are looking at comparables year over year that are just so skewed by where things were a year ago. Some companies I think were going to want to look at how they're doing now versus 2019. But the 2020 year over year comparisons are going to be very skewed.

But as far as how markets respond to different things, you look at this week-- a huge blowout response from Goldman Sachs, and Goldman stock went higher. A great response, great numbers out of JP Morgan. Their stock went down 1% or 1 and 1/2%. So there's different ways that things are already baked in as well. And we've seen that this week with the great results from the financial sector. As you get into the more penetrated parts of the S&P sectors, I expect we're going to look to their forward guidance as a key market mover.

AKIKO FUJITA: Well, Chad, on that front, we've seen the Dow cross that 34,000 level for the first time on those strong numbers. We've gotten out from these banks so far. I mean, it feels like beyond that, the expectations for future growth is spilling outside of value names as well. Where are you positioning yourself right now on the expectation that this momentum does continue?

CHAD OVIATT: Yeah, great question. Thanks for having us on. Really, for us, we continue to emphasize being balanced, being very deliberate in our portfolio construction. So we're not tilting necessarily to growth or value. We are, at kind of our core, individual stock pickers. And our equity team is looking at very much that forward guidance story, but also margins. So we're going to be looking at different things that are impacting various sectors and individual companies to make a decision. And that goes beyond just that growth over value discussion.

Certainly, having a 10-year Treasury back in the 150 to 160 range helps some of those growth momentum names. We know that story. But also, there's some really good value stories going on. So it's about trying to harmonize that portfolio within the construction. Right now, if we were to tell you what our favorite three sectors are, it's industrials, materials, and finance. So, I guess, that does lean to a value tilt, but we are staying pretty balanced in our construction.

ZACK GUZMAN: David, would you agree with that one as well?

DAVID BAHNSEN: Yeah, we're real bottom-up oriented as well. And so, in that sense, we have quite a bit in common. But I do think you end up with a value tilt right now when you're being bottom-up oriented. And for us, as particularly dividend growth investors, we really have value orientation just because some of the great dividend growers are in consumer staples. Last quarter, they were in energy, and energy was at a really attractive value. That's-- there's been a great recovery there.

I think you have to be bottom-up oriented. I think the indexes are trading at multiples that are too expensive to just want to own everything. Discernment right now is very key. And I know people have been saying it for years, but it's really become true. It's now the time for active managers.

AKIKO FUJITA: And Chad, when you look at the economic data, everything points to this momentum picking up in the economic recovery. We saw jobless claims falling to their lowest since March of last year. Retail sales jumping 9.8%. Have your inflation expectations shifted at all as a result of the string of data we've gotten this week, or do you sort of just listen to what the Fed chair has said essentially, that this is transitory and there shouldn't be any worry about that?

CHAD OVIATT: So we did get some really good economic numbers coming out of March, right? We consider March kind of a lift-off point for the US economy. It's really picking up speed, kind of moving into that next gear, if you will. We saw with the consumer price index this week, moving to 2.6% higher year over year. But the markets kind of took that in stride. They looked at that and cited-- I think a lot of market participants were citing the so-called base effect with those year over year comparisons.

And so, we would suggest that some of the inflationary pressures right now may be transitory. You have supply chain disruptions, production bottlenecks. There's some commodity input prices. Some of those may be temporary and resolve themselves. That said, we're still looking at 2.9% as an inflation target for this year. But we think, as the Fed has mentioned, some of this is transitory this year. Inflation is going to be a bigger story in 2022.

AKIKO FUJITA: We'll be watching that one closely. Chad Oviatt, director of investment management at Huntington Private Bank, as well as David Bahnsen, Bahnsen Group chief investment officer. It's good to have both of you on today.