Stocks Are in a 'Junk Rally,' Says Manulife's Roland

Watch Stocks Are in a 'Junk Rally,' Says Manulife's Roland - Bloomberg on Dailymotion

Transcript

00:00Are you concerned? And if so, about what?

00:03We are. Bonnie, that was a great interview. I listened to it earlier. And Andrew pointed out

00:07one of the things we're watching every morning when we wake up, it's unprofitable stocks,

00:13meme stocks, crypto-related assets. Again, you're just seeing a sort of junk rally playing out as

00:20momentum and sentiment has really been the name of the game here. It's a key reason that we're

00:26allocating to higher quality stocks. We're fully invested, but we are drafting off the market

00:31right now. We don't want to be that lead race car. We want to be right behind, not chasing beta here,

00:38but still owning these high quality stocks that are producing earnings. The earnings engine in

00:42the United States is still on. So while we want to watch those more speculative corners of the market,

00:48we do want to be invested. And again, following the trends in those high quality pockets of the

00:52market. So how do you do that, Emily, then, you know, with avoiding as much downside as possible?

00:58I mean, do you go for the names like NVIDIA and so on still? Do you look at particular ETFs,

01:03particular sub-indices of tech? Yeah, so we are overweight technology. It is one of the highest

01:10quality parts of the market. And the way that we measure that is by looking at things like return

01:15on equity. We're seeing tech communication services rank the highest there. But we also want to be

01:21mindful of not overpaying for earnings growth. So we look at things like the PEG ratio, the PE divided

01:28by earnings growth estimates. It basically tells you how much you're paying for future earnings

01:33growth. Areas like consumer discretionary do not rank well on that PEG ratio. So we're not overweight

01:39there, but we're seeing more attractive opportunities in areas like communication services,

01:45technology, even industrials and utilities, all of which have been really a play

01:51on AI, whether it's through power demand, whether it's through earnings. We're even seeing the gains

01:57in technology stocks helping financials. There's a symbiotic relationship there where because tech

02:04earnings are helping power the economy, that in turn is, and the markets, that in turn is creating

02:10opportunities for financials, particularly on the wealth management side. So really that circular

02:16relationship there really helping fuel positive results across various sectors.