Chief Investment Strategist on advising investors to 'control what you can control'

Brian Belski, Chief Investment Strategist at BMO Capital Markets, joins The Final Round to discuss how investors should navigate the market during COVID-19.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. Stocks giving up their gains today in the last half hour of trading with energy and financials the biggest underperformers of the day. For more on this, let's bring in Brian Belski, Chief Investment Strategist at BMO Capital Markets.

And Brian, let's start with the news that really has sunk the markets in the last half hour of trading, the possible escalating tensions-- very possible, though. We don't know what exactly will happen after President Trump announced plans to build some sort of conference on China on Friday. Just from an investor's perspective, I'm curious how closely you're watching this and how you think investors should be looking at these recent developments.

BRIAN BELSKI: Thanks for having us, Seana.

You know, the one thing I'd love to say is that it's so refreshing, and I think it's two reports in a row that I've written on a weekly basis, that I haven't mentioned COVID-19, coronavirus. And so that's-- I think that's a major positive. And now it-- when we talk about the markets, we're not talking about coronavirus anymore. We're talking about the negative implications of President Trump and his comments, so I think we're back to normal again, which I think is actually great.

But, you know, from a-- on a near-term basis, clearly the market is taking a little bit of a breather, especially after how strong it's been the last few days. I think the move above 3,000, although I'm not a technician, I think it's a very strong psychological positive with respect to the-- to this notion and the saber-rattling with communist China.

Remember 2018, the markets, from a fundamental perspective and economic perspective were doing great. But it was really the tariffs and the saber-rattling back and forth between the US and China that held things down. And it wasn't until the all-clear kind of waved away in the first quarter, January, of 2019 and the Fed started cutting rates that we were back on-- back on the horse again in terms of rising stock prices.

So clearly we're watching this on a near-term basis and it's going to cause some volatility, especially considering the type of gains that we've seen since that March 23 low.

MYLES UDLAND: You know, Brian, you mentioned that you haven't been writing about COVID in your notes, but it would seem that that still is-- is a potential, if not a likely-- you know, maybe called-- it's called a marginal bid on the market. Like, we get to the second half of the year, right? The course of the virus is going to matter.

Do you have any sense of, like, what conditions would need to change with respect to the virus, that would get investors perhaps more interested in that kind of line of thinking instead of, as you mentioned, back to the old comfy friend of US-China trade tensions.

BRIAN BELSKI: Well, I will tell you, it's not that we're avoiding talking about coronavirus, COVID-19. It's not the very first thing. And I think, you know, one of the lines that we say in our broader PowerPoint when we're doing big presentations, something like this, is control what you can control. And I think too many investors were trying to be closet epidemiologists and say cool words like hydroxychloroquine and remdesivir, and we forgot about looking at stock and industry groups, in services and products and all of that fun stuff, on a fundamental basis.

So you know, at the end of the day, the markets began to recover. Now you have-- the liquidity stuff is fine, but recover-- the market started to recover when we started to receive less negative data on COVID. And then, all of a sudden, now we're seeing less negative data on the economy.

The next thing to come through is less negative data on earnings. And we think that, you know, we're still-- we're still too worried about the shape of the recovery on the economic side, whether or not the U, V, W, L, whatever. I think what the bottom line is, as the economy begins to recover, we're going to see that marginal improvement that, I think, most of these economic projections have been very wrong and too negative.

And so the market actually has more to go. So it's-- it's refreshing that the first word of our [AUDIO OUT]

SEANA SMITH: Looks like we just lost Brian there. Brian, are you still with us?

BRIAN BELSKI: Yep, I am. Can you see me?

SEANA SMITH: Yep, we got you. Go ahead.

BRIAN BELSKI: OK. Sorry. But anyway, I'm back.

But at the end of the day-- at the end of the day, it's refreshing that, I think, people are starting to focus on the markets again. And I think the key thing-- you know, there's been a lot of talk in-- so far in your show, Seana, about this notion of financials and earnings and-- I'm sorry, and energy coming back, and this whole other notion with respect to rotation.

But I think we need to see more than two or three days or, let alone, a week of financials and energy going until we start to see that real rotation out of the leaders which continue to be, clearly, tech and communication services.

RICK NEWMAN: Hey, Brian. Rick Newman here.

We had a public health expert from Johns Hopkins on at the top of the show. He said even with the accelerated timelines for a vaccine, still probably two years until a vaccine is available to the public. Is that fine with markets? Or has the market action we've seen lately been predicated on some kind of breakthrough this year or early next year?

BRIAN BELSKI: That's a great question and thanks for reminding me to mention that. We've had the very good fortune of moderating BMO Financial Group's official COVID-19 coronavirus call on a weekly basis, and our primary outlet in terms of data is coming from Dr. John Whyte, who is the Chief Medical Officer and expert at WebMD. And he's saying things that are very different.

And he used to be, actually, at the FDA as well, and there are some-- there are some feelings and thinkings from the FDA and even the-- the medical community that we could see a vaccine by the end of this year. I think when you take a look at historical precedents, it's usually 18 to 24 months. But clearly, you have a list of 20 to 40 companies that are hustling in terms of trying to get something out.

I know you mentioned Moderna earlier. You have Gilead, you have-- you have AstraZeneca. A lot of companies are very close. And two years is, I think, maybe a little bit aggressive, but at the end of the day, too, you know, you have to be careful on not living your life until you see a vaccine, either. And so I think that's-- it's going to be really difficult to try to handicap that.

And then lastly, too, this whole notion of a second wave, you mentioned that as well. And you said you had Dr. Fauci on earlier this week, talking about you know, there's no-- there's no definite way that-- or definite proof that we're going to see a second wave. That also is another fear that one is coming, but at the end of the day, we don't know that.

And that's why we always tell investors to go back to what I said earlier, about control what you can control. Buy good companies. Stick with your companies. And if they go up too much, you pare back to what your position wants to be, and if they go down too much, you pare-- you add to what your position ultimately be [INAUDIBLE] longer term.

SEANA SMITH: All right. Brian Belski of BMO Capital Markets, always great to have you on Yahoo Finance. Thanks so much for joining the show today.