Chief Investment Strategist on the 2020 election's impact on markets: 'People are putting way too much stake in the politics'

Brian Belski, Chief Investment Strategist at BMO Capital Markets, joins The Final Round to discuss the day's market sell-off and his outlook for markets in the coming weeks.

Video Transcript

SEANA SMITH: Yeah, well, certainly, that's the big question right now is when will the market find its footing? So for that, I want to bring in our first guest. We have Brian Belski. He's the chief investment strategist at BMO Capital Markets. And Brian, you've been listening to us. We need to ask you. You are the expert here.

When you see a down day like this and really the selling pressure so far this month across the board. All three of the major averages under significant amount of pressure today. What's your reaction to this? Is this something that makes you a little bit nervous? Or is this actually some healthy activity for the market?

BRIAN BELSKI: Well, believe it or not, it's healthy activity, especially given the fact that momentum markets, I think, you know, I know that they move in both directions. That's number one. Number two, also the lack of perspective of people on Wall Street. They have the attention spans of mass selling. All they understand is yesterday and today.

Remember, yesterday, we were up. In the second half of Monday, we were up. We basically just erased Monday's and Tuesday's gains today. And then, thirdly, I think just because we didn't have it last year, Seana, last year, September was a marvelous month.

September historically is one of the worst months of the year. And then you pile in all this continued and increased chaos again. It really fits with our overall theme, quite frankly, that the market society, our lives, we're transitioning from the chaos of COVID-19 coronavirus into coexisting with the virus.

And now sprinkle a little chaos, whether or not it's the election or kids going back to school or the curve going up again, which we all knew it was going to happen. More people testing. We all need to kind of take a deep breath and understand that after such a huge move in the market, there was bound to have a consolidation phase, whatever the technicians want to call it.

But I do think from a fundamental perspective, stocks are higher a year from today. And, again, I know we love to talk about daily gyrations in the market. But this is pretty normal for a September time period.

SEANA SMITH: Well, Brian, when you take a look, you've reinstated your year-end S&P target. You have 3,650 for the S&P. We're sitting right now at 3,236. What's going to be the catalyst that will get us up to 3,650?

BRIAN BELSKI: No more of the silliness, I think. I mean, we have to kind of get through some of this news. I mean, that Andy brought it up earlier about the at six-month anniversary. I think March 23 was an important date because the Fed was signaling in terms of what was going to happen. But we knew what the stimulus package was.

That's actually the same day that we took our target to the side, transitioned into a 12-month target. And then we've reinstated our target on August 28, the day after Chairman Powell talked at Jackson Hole in terms of changing the Fed mandate. That was a huge deal. That was a huge deal. And if you take a look at where stocks are just on a year-over-year basis, we're exactly flat.

If you think about the policy with respect to the Fed and at a zero rate policy for the next two years and the market is flat this year, especially considering kind of the zombie apocalypse that most people were talking that was going to happen, I think it's remarkable to the zillion.

And so I think we're going to kind of get back to normal once we've understand that we're not going to get a massive second wave, once we kind of move through the silliness of the election. And I think people are putting way too much stake into politics. And I think we just need to kind of get through this. And I think that-- I think November or December, especially December, could be a great month for stocks.

RICK NEWMAN: Hey, Brian, Rick Newman here. I'm going to pick up on something you just said. I saw a headline today saying something like, Stocks Tank as Trump's Reelection Odds Dim, you know, trying to make the connection from one to the other because we have to have cause and effect every day in the markets, right?

My view is that the markets have essentially made peace with the possibility of a Joe Biden presidency. We know what his tax plans are. We know under what scenarios they might happen. They might not. Do you agree with that? You think there's still some-- some quivering left on account of whatever the election outcome might be?

BRIAN BELSKI: I think there's still some quivering, quite frankly. But I think that investors give politics way too much credit. You know, we've said it for years that politics have nothing to do the absolute performance of the stock market. They can either answer to track the current trend. The current trend in terms of the economy and earnings are improving.

And I think politics are like life, you know. And it's not what you say. It's what you do, OK? And think about this. Mr. Biden has-- has a lot of pressure in terms of saying things in terms of taxes. His number one job in terms of commander in chief right now is get the economy going. How can you crank up corporate taxes and have these companies employ people?

You have to be careful. Politics are going to-- politics are going to say one thing and do another. The other thing too from a realistic standpoint. Remember the regulation side of things when President Trump won and the tax cuts? We as individuals didn't feel it until 2018. Majority of companies didn't feel the tax cuts until 2018.

The moral of the story, Rick, is I believe that if you're making portfolio decisions based on politics, it's the wrong way to go. Base always-- should always base your portfolio decisions on fundamentals and take the emotion out of it. I think people are way too emotional with respect to politics right now.

ANDY SERWER: Hey, Brian. And just quickly, I mean, you said something that caught my ear there. You said that it's remarkable that the market's doing as well as it is given all these conditions. But doesn't that suggest looking at your glass half empty that that that's an incredibly risky environment? If something is remarkable, what would be less remarkable is if the market wasn't where it is today and it went down.

BRIAN BELSKI: Well, great way-- great way to put it. But I'll go do the glass half full as I usually like to do, because it's remarkable considering the type of negativity. In Wall Street and Main Street, we are so negative right now. And we know tempers are hot. And we react to every single thing.

And listen, when coronavirus came onto us, Andy, it was fearful of us. We didn't know what was going on. And I think that really drove things to a different level in terms of fear and negativity. For all intents and purposes, the last 10 years of this bull market have been all about fear and doubt and not liking the United States. And, of course, the political connotations to that.

Now, all of a sudden, nobody doubts it. Nobody believes this. And we have to take a step back and remember, the reason why we got through coronavirus is because we have the best companies in the world in the United States. We have the best means to take advantage in the United States.

And I think it's remarkable given all the negativity that we're, in fact, right at the unbelievable unprecedented move to the upside but that we're flat for the year considering the shutdown in the economy and the negativity still swirling around Wall Street.