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Stocks slip as inflation jitters linger

Federated Hermes Global Equities Portfolio Manager Louise Dudley joins Yahoo Finance Live to discuss the latest market action.

Video transcript

AKIKO FUJITA: Let's take a look at the broader markets right now because we are seeing it down to start off the week. The Dow now down about 140 points, while the NASDAQ the laggard here, down 78 with those tech stocks continuing to push lower. Let's bring in our guest here. We've got Louise Dudley, Federated Hermes Global Equities Portfolio Manager. Louise, give me a sense of how you're looking at the markets and how it sets up for the week.

LOUISE DUDLEY: Yeah, so we've certainly seen some volatility off the back of some slightly weaker numbers last Friday. And we saw that a little bit the previous Friday as well. So people are worried about valuations from an equity perspective. Overall, things are looking quite exuberant. We've got the rebound trade that's coming in strong. Things are still opening. We've got good earnings momentum. But at the same time, people are worried about the resurgence in inflation as well. So, a little bit of volatility at the moment if you can take it.

ZACK GUZMAN: And yet, we still have the VIX only at about 20 right now. So I mean, you kind of get the sense that the jitters are a little bit more extreme. We had Dan [INAUDIBLE] talking about what could be a 20% sell-off if we see the Fed kind of move in the summer to signal its next steps in regards to tapering. But what do you make of kind of where we're at in the VIX right now, given the volatility that we've seen play out over the last couple of weeks here?

LOUISE DUDLEY: Yeah, I think overall, people are still positioning for that risk on. We're still seeing the growth to value trade. So not too much concern actually from a fundamentals perspective. We're still seeing the economy, particularly the US, strength coming through. And I think, you know, there's definitely some inflation bears out there, you know, the extent to which we're believing that the Fed can keep this under control.

But actually, from what we're seeing, we're happy to continue to see that value trade continues to come through, some of the cyclicals, industrials. So yes, the volatility is definitely there, but it's an opportunity to just take some names as things play out day to day. Maybe, actually, some of the valuations that we're currently seeing, maybe some of the more sentiment driven market players might pull out at this point. So that might be more of an opportunity for that fundamentals for you to come through.

AKIKO FUJITA: Yeah, to your point, it feels like, at least if we're looking at the market moves today, that trade or that that's-- push into value continuing. Where do you stand on some of the growth names, and how do you trade that, given the concerns, number one, about momentum, but also higher rates?

LOUISE DUDLEY: Yes, so as I mentioned, we are definitely seeing the trade out of some of those growth names. But we're mostly positioned from a tech perspective within some of the semiconductors, which is where we see a constrained supply. There's few really good companies that are controlling that. Yes, they're increasing that supply, but prices continue to be tight. So definitely from here, we expect the cycle to go a bit longer than people are expecting. Big demand, so definitely well positioned within those semiconductor names, not just in the US, but also in Taiwan.

AKIKO FUJITA: Louise Dudley, good to talk to you. Appreciate your time today.