The big picture environment is one where you have rising growth forecasts: Portfolio Manager

Ed Campbell, QMA Managing Director and Portfolio Manager join the Yahoo Finance Live panel to discuss the latest with the markets.

Video transcript

ZACK GUZMAN: I want to shift back over to the markets, though, because not only are we watching this impact that return in the reopening trade, we're noting decline here among some of the airlines, as well as cruise lines, getting hit off this news, but also inflation data coming in mostly in line, potentially a little bit hotter than maybe expected.

And for more on those developments in terms of the market focus, I want to bring on our first market guest here, Ed Campbell, QMA managing director and portfolio manager joins us now. And Ed, I mean, when we look at this, we've been talking a lot about that rotation on the reopening trade. I suppose any headline that moves against kind of a full steam ahead reopening might cause a little bit of a drawback on that front. But what do you make of what we're seeing play out today with the Dow still in negative territory?

EDWARD CAMPBELL: Well, it's pretty much a continuation of what we've seen over the past month or so. Of course, we're still very bullish on value, on the reopening trade in general. I think the big picture environment is one where you have rising growth forecasts. You have building inflation expectations, but from very low levels. And you have continued policy accommodation, right? So I think this is sort of a great environment for stocks in general.

In terms of the value, the small cap, the reopening trade, I just think it got ahead of itself, right? So if we think of how it performed since the election and in the early part of this year, what we're seeing over the past five weeks or so is just pretty much a pullback. Things are going to ebb and flow. Markets aren't going to move in a straight line. But we do think that that's the way to go if your time frame is the rest of the year.

AKIKO FUJITA: So it sounds like you're still positive on some of these cyclical names, the value names that we've seen gain over the last month or so. But does that come at the expense of growth? How are you looking at some of those opportunities?

EDWARD CAMPBELL: Well, you know, our basic view is that we were going to see a broadening of the market in 2021. And that value was likely to lead, but it didn't necessarily mean that things like secular growth or technology were going to have very poor performance. I just think after the massive outperformance that you saw in 2020, given the stay at home trade, that they were likely to cede leadership. But that doesn't mean that they're not going to continue to have decent appreciation.

ZACK GUZMAN: And on the inflation front, always exciting to see these two camps continue to push in opposite directions around fears of runaway inflation. And we got the CPI update this morning at 2.6% growth or 2.5% in terms of consumer prices, 0.6% month over month. Does that kind of signal anything? Because of course, we've been hearing from the Fed it's going to be hot for the next couple of months, but eventually cooling off. What's your take?

EDWARD CAMPBELL: Yeah, I mean, we know that we're going to get some high inflation readings as we head into the next few months, largely due to base effects because we're very low readings from a year ago, when the lockdowns were in full effect. I think the key test for policymakers is going to be how they respond once the economy reaches full employment. And that could come sooner than expected, especially in the United States where we have so much fiscal policy stimulus in the pipeline and potentially more to come.

AKIKO FUJITA: Ed Campbell, QMA managing director and portfolio manager, good to talk to you today. Appreciate you stopping by.