U.S. Tech Stocks Have Given All they Can Give: Robeco’s Fedeli

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Dollar weakness has been a theme that we’ve talked about quite a lot already at the start of this week how much are you factoring further dollar weakness into your equity strategy i know that you have a bottom-up approach but does this impact your strategy at all right now it does it affects the type of stocks that we invest in clearly and you know we don’t see the dollar falling off a cliff but we clearly don’t see any support for the currency at the moment and this is also good for currencies such as emerging markets currencies it is good for the euro europe is looking marginally better than the us right now from a macro standpoint so it does affect the way we pick our stocks and what’s your stock picking strategy in the u.s right now fabiana you know we’re very concerned about the macro environment in the u.s so the stimulus plan that has just been unveiled is good is the amount is pretty much as expected but i think it only supports the market up to a certain extent because in the end we’re all going to ask what comes next what is going to happen in terms of debt and also is this going to be sufficient because we really don’t know how covet will continue in the u.s at least in the next few months until the vaccine so what we have been doing we have been quite cautious on the us we actually overweight europe versus the us and we prefer north asia to the us we have however started to take some profit out and this is earlier in the last quarter from the high flying tech stocks because we believe that pretty much they’ve given all they could give and we have started cautiously to move into more cyclical stocks but still staying very high on the quality again because we’re concerned about macro yeah that’s interesting that you talk about um taking profits from tech stocks moving into cyclical stocks do you get the sense fabiana that in the us the market is on your side with that or do you feel a bit contrarian in taking that view at the moment well i think if you look at the results uh the recent results from tech stocks which have been okay have technically beaten but the market really seems to have a bit of high flyer tech fatigue i mean you need much more out of these stocks to actually justify the huge differential and performance and evaluations versus the rest of the market so i think the market is starting to feel that high-flying tech company fatigue and it will last for a while yeah we also have um of course the fed meeting this week the expectation generally is that we’re going to get a commitment to lower for longer fabiana how much is this baked already into the equity market of course rates have have barely moved uh uh recently but is the equity market going to see any further upside from the fed or do we need something um with a lot of um bang for its buck out of the stimulus plan to give more of an uplift to u.s equities look what the fed has done until now has really supported the liquidity market but really what it has supported has been a bear market rally where everybody has been piling in stocks that they felt were quite defensive during the corona virus outbreak what i think we’re going to need next for another leg up we actually need finally better macroeconomic outlook because the next leg up will come from a rotation into cyclicals and right now you can see that in certain regions of the world you see the improvement for example in north asia you see some improvement in europe also with the latest rescue package but still not in the us yeah um yesterday um we noted the fact that goldman off the back of a weaker dollar fabiana said they like foreign exposed tech and energy names on a weaker dollar they’ve been touting u.s stocks with high revenue from western europe and the brics as well would these be the sort of companies that you you’re looking at as well on the back of a potentially weaker dollar fabiana look we actually have um just recently published our quarterly outlook and in the preceding one at the beginning of april we actually made a call for north asia versus the us we preferred it because it was coming out of the coronavirus outbreak much faster and getting to more normalized economy in the recent outlook we have uh just added europe to this we particularly like certain areas in europe such as germany industrial some specialty material companies so if the call is start to rotate into cyclicals yes that is also something that we very much believe in but we still believe that we should stay high on the quality scale

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