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Nov. 12, 2019, 9:47 a.m. EST

Don’t let the headlines scare you into cash, says UBS portfolio manager

Critical information for the U.S. trading day

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By Barbara Kollmeyer, MarketWatch


Getty Images
NYSE trading screen in August 2017

It is no surprise to see stock markets sitting on the fence on Tuesday, as a 12 p.m. Eastern address by President Donald Trump to the Economic Club of New York looms.

Investors will be listening for clues regarding the progress of Sino-American trade talks, a topic that tends to get markets excited. Any move could be short-lived, but Federal Reserve Chairman Jerome Powell is speaking on Wednesday, so market nerves may be tested. Trump has been tweeting too:

Don’t get too tangled up in headlines, advises Sherry Paul, private wealth adviser and senior portfolio manager at UBS Global Wealth Management, in our call of the day . She tells MarketWatch that her advice to clients these days is to be “politically aware, but invested in the data” when making portfolio decisions.

“What I mean by that is there’s a difference between what we refer to as policy driven and politically driven disruptions in a market that are caused by the fear of something happening,” such as on/off trade tariffs or whether the Fed will make a policy move, Paul said.

Those worries cause friction in the stock market and anxiety for investors, who may freeze and go to cash “typically at the wrong time, and then stress out about how they get back into the market,” she said.

Her list of advantages for investing in stocks? Earnings have been positive, companies are flush with cash, unemployment is at a 50-year low, wages are rising, the consumer looks to be in pretty good shape and the stock market is trading at 17 times earnings, as opposed to 27.2 times at the top of a market bubble that burst in 2001 and 2002, she says.

As for sectors, Paul likes consumer staples and consumer discretionary, the latter of which is more sensitive to the economic cycle as those companies produce things that aren’t essential for living. And “if you’re looking for an area of the market that’s been undervalued all year and that is coming out with earnings surprises, look at the health sector,” she said.

The market

The Dow /zigman2/quotes/210598065/realtime DJIA +1.22%  , S&P /zigman2/quotes/210599714/realtime SPX +0.91%   and Nasdaq /zigman2/quotes/210598365/realtime COMP +1.00%  are inching higher, with small gains for European stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.16% , while Asia markets /zigman2/quotes/211618636/realtime XX:ADOW +0.47% were mostly up, with Hong Kong /zigman2/quotes/210598030/delayed HK:HSI +1.07%  stocks recovering, though it was another violent day of protests there.

The chart

Bank of America Merrill Lynch provides this chart that highlights big themes for the next decade, and what ruled in the last:

Read: Bank of America says “fear of missing out,” pushes fund managers from cash to stocks

The buzz

Amazon.com /zigman2/quotes/210331248/composite AMZN +0.64%  will open a branded grocery store next year, CNET reported on Monday. The online retailer confirmed the news to multiple media outlets.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,015.06
+337.27 +1.22%
Volume: 224.83M
Dec. 6, 2019 5:07p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,145.91
+28.48 +0.91%
Volume: 1.70B
Dec. 6, 2019 5:07p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,656.53
+85.83 +1.00%
Volume: 1.87M
Dec. 6, 2019 5:16p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
407.35
+4.69 +1.16%
Volume: 0.00
Dec. 6, 2019 5:50p
loading...
/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,342.88
+15.55 +0.47%
Volume: 0.00
Dec. 6, 2019 1:05p
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/zigman2/quotes/210598030/delayed
HK : Hong Kong Exchange
26,498.37
+281.33 +1.07%
Volume: 1.64M
Dec. 6, 2019 4:08p
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,751.60
+11.12 +0.64%
Volume: 3.12M
Dec. 6, 2019 4:00p
P/E Ratio
77.55
Dividend Yield
N/A
Market Cap
$868.44 billion
Rev. per Employee
$359,671
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