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Strategist is looking beyond U.S. for global recovery

Willie Delwiche, Investment Strategist at Baird, joins The Final Round to discuss recent market action, how investors are positioning themselves, and what a global recovery could look like.

Video Transcript

AKIKO FUJITA: Welcome back to "The Final Round." The major indices closing in the red today, with the NASDAQ the biggest laggard, down about 185 points. Let's bring in Willie Delwiche. He is a Baird investment strategist. Willie, it's good to talk to you today.

You know, we've been talking about the recent rally that seems to be a bit more broad based. We're-- today, we saw the big sell-off in some of the big tech names as well. I mean, up until the last hours, there seemed to be some optimism, at least in terms of the economic recovery moving forward. I'm curious if you think that the levels that we've seen over the last several days are justified, given the question marks we still have around the vaccine, as well as the virus at whole?

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WILLIE DELWICHE: Yeah, I mean, that's a great question of whether or not the economy is actually ready to reaccelerate. And then given that then, can we start to see sustainable strength of small caps and mid-caps and some of the cyclical leaders? We've seen that over the past month or so. We've seen that-- we saw that today.

It was very much a move away from some of the defensive posturing, in terms of mega caps, in terms of gold and silver, in terms of bonds, and towards things like financials and industrials. If that can continue, that says good things maybe not just about the US economy, but about the global economy and the pace of the global economy. And maybe the US doesn't need to lead anymore. Maybe it's a globally-based recovery that we look at right now.

AKIKO FUJITA: So is it time to rotate out of those tech names, maybe into cyclicals? How are you positioning yourself?

WILLIE DELWICHE: Yeah, I think very much so. We look for areas that are starting to see improving strength. We see that from a size perspective, in terms of from large caps down to mid-caps. You see that from a sector perspective. We see industrials are the best performing sector over the past one month, over the past three months. You look for continued leadership there out of materials, out of financials. And then also just the global diversification trade, start to look away from US leadership and towards things like Europe and emerging markets.

AKIKO FUJITA: What about a sector like retail? You know, we've seen a bit of a bounce-back. We saw-- you know, we've seen names like a Simon Property Group, for example, look at some of the distressed companies, potentially looking to acquire them. I mean, how are you looking at that, given the shake-down that we've seen over the last four months?

WILLIE DELWICHE: Yeah, that's a great question. I'd rather-- you know, consumer has been strong for so long that maybe we don't look for leadership there or continued leadership there but start to look really from the business side of the economy, in terms of investment opportunities-- so industrials and materials in that type of area, rather than saying, the consumer, which has generally been strong and has bounced back, maybe that has-- the news is out there. Maybe we start to look for improvement in the economy from an industrial aspect.

AKIKO FUJITA: Willie Delwiche with Baird Investment, he's a strategist there. Good to talk to you today. Thanks so much for your time.

WILLIE DELWICHE: Thanks a lot.