Wells Fargo: We're sticking with larger cap, midcap, US over international

Carl Quintanilla (Anchor) 00:00.110

guys let's bring in scott wren this morning senior global equity strategist over at wells fargo investment institute talk about what the new year may bring scott good to see you

Scott Wren (Senior Global Equity Strategist) 00:08.750

hey carl

Carl Quintanilla (Anchor) 00:09.830

i know you're also looking for better GDP and accelerating earnings but can you get moderating inflation along with that i you

Scott Wren (Senior Global Equity Strategist) 00:17.360

know i think you can carl and and you know we've got a two point eight percent number out there next year for CPI so that's you know and that's not pretty much in line with where we are right now but i think that you know if we're wrong about that you probably see inflation

Scott Wren (Senior Global Equity Strategist) 00:31.760

drift a little bit lower and and you know really if i had to look out a few years i would think it would drift a little bit lower too so i i think that modest growth with moderate to moderating inflation that's a good setup for risk assets and that's really what we're looking

Scott Wren (Senior Global Equity Strategist) 00:45.360

for in twenty twenty six so is your playbook

Carl Quintanilla (Anchor) 00:47.830

about adding risk at large or more rotating within areas of risk and inequities

Scott Wren (Senior Global Equity Strategist) 00:53.590

you know we've tried to we've done a little bit of both i mean we've tried to be patient here we took advantage of the pullback nice pullback we had in early april this year we'd love to see another pullback but it certainly really hasn't happened and so the rotation thing the

Scott Wren (Senior Global Equity Strategist) 01:09.670

way we've been playing that is we had been overweight infotech we had been overweight communication services back in august we went to a neutral on communication services and we just recently maybe about a month ago went to a neutral on technology so you know that's about fifty

Scott Wren (Senior Global Equity Strategist) 01:29.350

percent of the total market cap of the S and P five hundred so if you're just you know looking at those two sectors i mean you're carrying a load there at even weight and we're trying to to look at the AI trade in a little bit different way we like industrials we like utilities

Scott Wren (Senior Global Equity Strategist) 01:43.790

you know clearly somebody 's got to build build the data center somebody has to upgrade the electrical grid these utilities are going to see a real big surge in demand and probably some higher rates going forward so we like those and then we've also moved some money into

Scott Wren (Senior Global Equity Strategist) 01:58.950

financials that's really our most favored sector you know a lot of financing M and a deregulation better economy so so we've made some adjustments and we've done a little bit of rotating but i think you know we've got a seventy five hundred target out there for year end twenty

Scott Wren (Senior Global Equity Strategist) 02:14.510

twenty six and i and i and i think that's a really doable number in the type of economic environment that we expect scott

Sara Eisen (Anchor) 02:22.270

it's been a strong year for stocks across the world it's been a global bull market if you will do you stick to the US or do you look elsewhere

Scott Wren (Senior Global Equity Strategist) 02:31.670

well you know we had you know for let's say the four last four or five years we had been really all us but but probably about a year ago we were more neutral on developed international we're neutral on the emerging markets it's probably a cheaper way the emerging markets are

Scott Wren (Senior Global Equity Strategist) 02:51.710

probably a little bit of a cheaper way to play technology and to play AI but i i think for us really you know if we had our druthers we're sticking with larger cap mid caps we're sticking with us over international so we have exposure internationally and and you know we're we're

Scott Wren (Senior Global Equity Strategist) 03:10.150

certainly looking for opportunities to to increase exposure there but i don't think right now is the right time for that what

Sara Eisen (Anchor) 03:17.470

do you think about what's going on in japan right now

Scott Wren (Senior Global Equity Strategist) 03:20.830

well you know it's kind of funny i used to be a currency trader i traded a lot of dollar yen and to be honest with you i can't figure out why dollar yen is not one sixty at least but you know japan they're in a tough spot they're in a demographic tough spot they've tried to get

Scott Wren (Senior Global Equity Strategist) 03:38.030

inflation they finally have it i don't think they're going to raise rates too much but but certainly the talk of it didn't disturb the markets like it maybe would have a few months ago so i think what's going on in japan is interesting we'll see if they can if they can continue

Scott Wren (Senior Global Equity Strategist) 03:56.670

to grow and turn in a decent number but you know i i don't want to get overly focused on what the bank of japan does i mean they're dependent on exports i'm more concerned about what what the rest of the world is doing which i think the rest of the world is going to do better

Scott Wren (Senior Global Equity Strategist) 04:12.990

next year relative to this year and the US is going to do better as well