Oil prices amid Ukraine-Russia crisis 'kind of a no-win for Biden,' strategist says

Envestnet PMC Co-CIO Dana D'Auria joins Yahoo Finance Live to discuss the latest jobs report and ISM manufacturing data, investing in cyclical stocks like energy, and the effects Russia-Ukraine may have on inflation and oil.

Video Transcript

AKIKO FUJITA: Well, job openings ticked higher in the month of December with 10.9 million job openings posted, according to new data from the Labor Department. Meanwhile, new ISM manufacturing data pointed to a slight slowdown last month, marking a third straight month of declines. But prices actually pushed higher, rising nearly eight percentage points.

Let's bring in Dana D'Auria, Envestnet PMC co-CIO. Dana, good to talk to you today. I want to start on that last point there because it is still the same story here when we're talking about prices continuing to pressure, to move higher as well. Give me a sense of where you think things are headed. We've rounded out a really choppy month. And it looks like today, things aren't necessarily picking back up.

DANA D'AURIA: Yeah, I don't think it's a huge surprise. Thanks for having me, Akiko, by the way. I don't think it's a huge surprise to see this. Obviously, we would expect Omicron to start sifting into the data. We know China's zero COVID policy. I mean, we know that the supply chain is still experiencing problems. Inflation is one of the results of that. We know also that labor shortages are impacting. So I don't think a lot of surprise here. You know, we had nice growth in the fourth quarter. But that was inventory buildup for the most part. We're still going to have to be working through some weakness.

BRIAN CHEUNG: Hey, Dana, Brian Cheung here. So how does the investment thesis kind of fold into that right now? Obviously, through the volatility, people are having difficulty trying to find the positioning here. So are there certain sectors, industries, companies that you're favoring in this environment?

DANA D'AURIA: Well, I would have to say that energy is the most consensus call at this stage of the game. And certainly the news now with Russia and Ukraine and the potential for sanctions on Russia, which is, of course, going to hit energy, of course, drives prices up, and potentially, you get a bump there. So it's been a consensus call. And I think short-term, that's only strengthened.

That being said, over the long haul, we're obviously going to have to deal with structural changes. You know, Biden continuing to move forward on plans for ESG and things that can hurt that sector, so short run versus long run, I guess. I'm still also a fan of the cyclical, the value over growth. I think we have a ways to go on that still. We did see some movement in the spreads, obviously, over the course of the last month, but I don't think that's all we will see.

AKIKO FUJITA: I mean, to your point on energy, I'm looking at shares of Exxon hitting a new high in the session today on the back of a really strong quarter for them, obviously correlated to higher gas prices. We've had guests on who've said they think that oil could go to $100 a barrel. What do you see there? And how are you playing the space?

DANA D'AURIA: You know, I won't make a prediction on exactly how high it goes. I think, obviously, a lot depends on what happens with Ukraine and Russia. It's kind of a no win for Biden on this, I think, because if we avoid conflict, then, you know, everything kind of stays as is. I think if we have conflict, it's very difficult for him. It hurts his agenda. It increases inflation, makes it, again, harder for him to Build Back Better.

So I think you're going to see a lot of effort on his part to try to keep conflict down and prevent this. And then maybe that works against energy a little bit, right, relative to where it's being priced right now. But it remains to be seen.

BRIAN CHEUNG: A lot of political headwinds for sure, but Dana D'Auria over at Envestnet, thanks so much for breaking all of that down for us.