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John Hancock's Miskin Sees Choppy Market Environment

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Jun 6, 2023 03:06 · 14.9k Views

"Right now, fighting the tape is like fighting Mike Tyson," John Hancock Investment Management co-Chief Investment Strategist Matthew Mishkin says during an interview with Lisa Abramowicz on "Bloomberg The Open."

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Transcript

  • 00:00 If this is the sort of a new bull market, people do not like it.
  • 00:03 Matt, do you think that it is accurate to say that we are on the brink of a new kind of economic cycle that is starting to rear its head?
  • 00:11 We do not believe so.
  • 00:12 We think we're in a late cycle environment where you're in this choppy trading range across asset right now and you're getting this
  • 00:19 better than expected data, worse than expected data.
  • 00:21 It's all coming in relative to expectations and whether or not it's beating expectations, Mark could like it.
  • 00:26 If it's not, then the other side of the coin
  • 00:28 right now fighting the tape is like fighting Mike Tyson
  • 00:32 and it is a challenging backdrop
  • 00:35 to be relatively conservative
  • 00:37 in a late cycle environment.
  • 00:38 We're tilting toward the higher quality parts of markets, holding on here until we see more clear signal of a recession
  • 00:45 and on our doorstep.
  • 00:47 We're not there yet,
  • 00:48 but for us, managing risk is a top priority.
  • 00:51 There is this real kind of
  • 00:53 dilemma here.
  • 00:53 You can say we're not entering a new bull market, but can you get bearish?
  • 00:57 Can you fully rule out some of the areas that have gotten pretty beaten up and say they're not
  • 01:03 perhaps trying to yield a little bit more value here?
  • 01:07 Yeah, I mean for us
  • 01:08 the the value for example like financials right now, I mean
  • 01:11 you're seeing the higher cost of capital really weighing in the lending growth decelerate, but the solvency risk diminish.
  • 01:18 So that job support on Friday and what a week last week.
  • 01:21 I mean
  • 01:21 you get the ISM new orders index coming in below expectations 42.
  • 01:26 So leading indicator still showing a slowdown and then you got coincident data like the job support beat and causing a massive rally in these financial sector
  • 01:33 and some of these cheaper parts of the market.
  • 01:35 We would trim into strength, redeploy that capital into higher quality companies, great balance sheets, good ROV, things like that.
  • 01:43 And what we see in terms of earnings estimates to Mike's point is that in the back half,
  • 01:47 earnings estimates really ramp up.
  • 01:49 So it's nice in Q1 and Q2 that the estimates are -6% earnings growth and you could come in better than that.
  • 01:56 But in the back half, the Street is looking for a nice earnings recovery and inflection point.
  • 02:00 That's where the bar goes up and it's going to be harder to beat.
  • 02:04 So we're looking for those that have lower estimates.
  • 02:06 Tech and healthcare have flat to negative earnings estimates.
  • 02:09 Those two places we think could actually beat on the upside over the year.