14 Aug Genus Weekly In Focus – Addressing COVID-19 Concerns Week-22
Discussions continue of the new post-pandemic world. Russia releases news of a vaccine as the rest of the world proceeds with testing. As Biden’s lead progresses we take a look at how his election may impact the economy.
Sue Talbot: [00:00:04] Hi, everybody, today is Friday, August 14th. And welcome to week twenty two of the Genus InFocus videos. My name is Sue Talbot and I’m a partner and portfolio manager here at Genus. And with me is Wayne Wachell, who is our CEO and chief investment officer. So let’s get started. Our topic this week is what about the post pandemic world? So, Wayne, I wanted to ask your take on to headlines this week and the first one being on Tuesday, Russia claimed to have the world’s first coronavirus vaccine. So how did the markets react? And do you think this is a game changer?
Wayne Wachell: [00:00:40] Yeah, they call it a Sputnik vaccine, first one to go into orbit. So, yeah, it’s it’s more of a political stunt, I would say. Putin meant to actually build up Putin’s fame and their pro S, I guess, in Russia doesn’t mean much. They basically avoided the third stage testing here. So they probably will go ahead and use it in Russia, I presume. But that’s it. They’ll do a live run, I guess, rather than doing the third stage, I don’t think could really change the game that much. The market kinda yawn at it and just another one out there, another shot on goal, if you will. And we’ll see. Maybe it’s good, maybe it’s not. But they really haven’t gone through all the wringer to make this thing official.
Send us your questions for next week's video
Sue Talbot: [00:01:24] Do you think this is going to put pressure on other countries to try and fast track a vaccine? I think globally there’s about one hundred vaccines currently under development.
Wayne Wachell: [00:01:33] I don’t I don’t think so. I don’t think it’s not at all. I think most other countries are pretty concerned about procedure and official procedure on the health side. So I don’t see it really impacting or anybody to follow the same pattern.
Sue Talbot: [00:01:49] And how is Genus positioned when a real vaccine is announced?
Wayne Wachell: [00:01:53] Well, what a real vaccine is announced. We anticipate there’ll be more of a risk on environment with a value driven environment. And I think you’ll see the financials starting to move in that and or the cyclicals and economic sensitive names. And, of course, all the winners will probably take a bit of a break. So we’re are we have a bit of a barbell portfolio. We do have all the COVID winners, but we’re moving into some of the value names as well. We’ve been moving up our value exposure over the past couple of months. So we’re kind of on the fence. We’re waiting, and we still think it’s going to take some time here. And that growth is still is still going to be the winner over the next few months. But when there is more visibility, value will have a run here at some point time into next year.
Sue Talbot: [00:02:42] Ok, so the second headline I wanted to ask you about is that Joe Biden has picked Kamala Harris as his running mate. So were the markets at all surprised by this?
Wayne Wachell: [00:02:54] I don’t think so. I don’t think it was a game changer. I think that the Biden team, like a good football team, are doing what to do when you have the lead, they’re trying to run the clock out and they’re putting in a very solid defensive back who is going to hold on to the ball and not fumble it. And so she’s perceived as being low risk and will help maintain his lead, I think. And so that’s that’s a I think a wise choice, the obvious choice. And it’s not a game changer, but it’s going to be, I think, helping maintain his lead.
Sue Talbot: [00:03:28] So on a related note, I read an article that said if Biden is elected, certain stocks will benefit and they are the ESG and renewable names since the two trillion dollar green New Deal is central to his campaign. So what is your take on this, given we do have clients that are invested in our fossil free impact strategies?
Wayne Wachell: [00:03:48] Well, Biden will he won’t be so capital friendly. He’s going to raise taxes, et cetera. But he’s definitely environmental friendly. And so I think you’ll see the ESG names, the fossil free names do well if he does win. And I think it’ll have an impact. Obviously, the energy side on financials, Elizabeth Warren is all over financials in terms of more regulations there. So it’ll it’ll impact those areas. And I think it’ll definitely help the greener part of the equation and help the ESG and fossil free stocks.
Sue Talbot: [00:04:20] Ok, so since this the theme this week is the post pandemic world, can you share with us your top two or three observations in which the world has changed or will change post pandemic?
Wayne Wachell: [00:04:35] Well, no one is there’s been a massive acceleration into the digital economy. It’s probably jumped five years in terms of people buying things, and that’s not going to change. I think it’s going to go into teaching education as well, is going to jump start that space as well. It’s going to cause major changes in some of these areas and
really accelerate the whole digital digital economy. That’s that’s big. And with that comes, I’d say, a second change, and that is less travel. People are going to work. They can work from their home. I think half the half the population we working on longer term. And you’re seeing a migration from cities into the suburbs. And then with that, people have with COVID and they’ve been locked in. I think they’re getting tired of the same drapes. They’re getting tired of not having a gym. They’re going to want to move into bigger places. And then we’re seeing that take place right now. So this nesting thing is going on in terms of bigger homes and in homes in the burbs where you can live and do a lot of what you do, can work, live and exercise, I guess are going to be long term trends. And I think technology is helping that to happen. And and the pandemic obviously just kick started the whole move into some meetings and working remotely in that kind of thing. So we’re not going to go back even if there is a vaccine and it’s going to have to put a squeeze on some of the bigger cities, I think longer term.
Sue Talbot: [00:06:04] So you mentioned less travel. So do you think the demand for or the continuing, less demand for oil and gas will continue then?
Wayne Wachell: [00:06:13] Oh, absolutely.I don’t think the airlines are going to come back the same way they were in the past. In terms of business, travel is definitely going to go down. Maybe vacation travel will come back once the coast is clear. But you look at the long term, four or five years futures long term, the long term markets projecting definitely lower prices and they’ll be there. That could be a big bounce if they’re if the global economy takes takes hold next year, next year. But longer term, we’ll have less consumption of energy as well. And more technology will hit as well, I think, which will also impact energy consumption as well.
Sue Talbot: [00:06:49] And speaking of technology, you mentioned yesterday that there are some jobs that are going to be erased forever. However, there is job growth in certain sectors and technology being one of them.
Wayne Wachell: [00:07:02] Absolutely. With this massive transformation from things being delivered to your home in a war zone meetings and suddenly every single corporation that wants to sell to their customers and have things delivered require more technology. So they’re spending capex on technology, on technology. And there’s a belief that that spending is going to mitigate a lot of the jobs lost in those entertainment leisure areas and travel areas.
Sue Talbot: [00:07:34] Ok, so we want to keep this short, so we’ll end it here. Thanks, Wayne, for your insights and thanks everybody for watching. So please contact your portfolio manager if you have any questions, gents. And have a great weekend, everybody, and we’ll see you all next week.