S&P 500 breaks above 3,000 amid vaccine, reopening hopes

Everplus Capital Director Jason Rotman joins Yahoo Finance’s Akiko Fujita to discuss his market outlook as the S&P 500 breaks above 3,000.

Video Transcript

AKIKO FUJITA: Let's get right to our first guest for the hour. We've got Jason Rotman. He's the director at Everplus Capital. Jason, it's good to have you on today.

JASON ROTMAN: Thank you. It's good to be here.

AKIKO FUJITA: So, Jason, let's talk about where we've come since the last time we spoke back in March. You highlight the US market indices up 40% since the March lows. We're seeing the gains even push higher today. What do you think is driving the optimism?

JASON ROTMAN: I think a few things are driving it. I think, in no specific order, I guess you could say number one is, honestly, it's simple-- the Federal Reserve. These stimulus programs are seemingly never-ending. Now we're talking about, like, a third or fourth wave of stimulus. There is a get back to work bonus that Larry Kudlow is talking about. Global central banks, New Zealand's talking about stimulus-- so long story short, the market does love stimulus from the Fed. It is an addiction. But that's the reality.

Number two, objectively, California is opening. That's where I'm at. You're starting to see more restaurants open. So the fact that small businesses are going to start to make money again and pay their employees, that's a positive sign for the market as well.

AKIKO FUJITA: Yeah, to your point about seeing the reopening, certainly you could point to the optimism on the activity on the travel front picking up, as one does-- we're seeing the gains today, airline stocks certainly pushing higher today as well. How are you looking at that space right now? You know, on the one hand, yes, we are seeing increased activity. But it's still not even close to where we were pre-pandemic.

JASON ROTMAN: Yeah. You know, it's interesting-- I never would have thought that I would say, you know, now's the time to fade Warren Buffett. But now is the time to fade Warren Buffett in terms of-- you know, fading means going against from non-traders out there. Warren Buffett got out of Delta, right? Delta's over half off. When you talk about discounts, its 52-week high was $63 a share. You could buy Delta today for $25 a share. Is it going to be really lower next year? Probably not. Delta is going to be doing more business one year from now. And so big picture, macro medium to long term investor, Delta is a no-brainer today.

AKIKO FUJITA: And when you look at a stock like Delta, though, I mean, how much upside do you see at least in the medium term? You know, when you talk about the timeline on these airlines, we've heard everything from third quarter potentially at the earliest as a big bounceback, you know, maybe dragging through the fourth quarter, and then looking to 2021. So sure, you can make the argument that the bounce-- you know, it's not going to be lower a year from now, but what kind of upside is there really?

JASON ROTMAN: Tremendous upside. That's a layup you just gave me. I mean, it's over half off. Yes, listen, I get it-- you are correct. Is Delta going to sell out their flights by Christmas time? Probably not. But I'm saying 9 to 12 months from now, we are going to get back to a very regular travel schedule. And I think to make an investment in Delta-- I have no vested interest in saying this, it's one of those classic no-brainer opportunities right now. It's so cheap.

AKIKO FUJITA: And finally, Jason, you know, we've started to see the risk from the geopolitical side creep right back into the market. Certainly, all eyes on China right now with what's playing out in Hong Kong-- we're expecting that vote on the national security law. But there's also questions about the tensions between Washington and Beijing as well. How are you weighing that risk in relation to everything else that is playing out, at least on the coronavirus front?

JASON ROTMAN: Yeah. I mean, when there was no pandemic, that was the news of the day every day, right, that drove markets. You know, when China sneezed, the Dow would go up or down 300 points. But right now, I would be shocked if that topic actually materialized as a main event. I think it's just kind of politics and talking. There's not going to be any action to make the global economy even worse. It's just posturing, in other words, right now.

AKIKO FUJITA: So you don't think that there's going to be any impact on this posturing that's happening? I mean, even if you look at something like China and Hong Kong, I mean, isn't there an expectation that the US could potentially retaliate? And doesn't that raise the tensions, and with that, the risks that spill over into the market?

JASON ROTMAN: Yeah. I mean, you're challenging me today. I like it. When you have an election year of 2020 and Trump's trying to get re-elected, there is no way that in this coronavirus pandemic with, you know, the market going down 30% two months ago, that he's going to jeopardize his re-election and the market's rally with, you know, actual action towards China. That's my opinion.

AKIKO FUJITA: OK. And, Jason, you know, you were talking about some of the airlines, the opportunities you're seeing on that front. What are some other sectors that you think maybe investors are overlooking right now?

JASON ROTMAN: Yeah. Not so much overlooking, but I haven't really heard a lot of people talk about-- and I'll give a very specific one-- Zynga, for example-- mobile gaming platform. When you talk about the rise of TikTok now, right-- Instagram, obviously, social media is everywhere-- Zynga, in my opinion, which everything is, is a phenomenal acquisition candidate for Byte Dance, who owns TikTok or even Facebook.

Zynga has been a sleeper for years. They're at 52-week highs now-- or over the past few days. And it's on-- and if you look at a chart of Zynga, it's on an incredible run. And I don't think it's anywhere close to being done right now. So mobile gaming is a great idea.

AKIKO FUJITA: OK. You know, Jason, as often the case, there are tweets that come through from the president where we kind of look to see where the tensions lie on that front. And we did get the president today talking about the reopening that's happening. He said we made most governors look very good, even great, by getting them ventilators, unlimited testing, and supplies, all of which they should have had in their own stockpiles.

The president has certainly been challenging a lot of these governors to reopen much more quickly. You look at some of the scenes that we saw over the weekend-- there's that video from the Ozarks that's been circulating the pool, in the water where it's just completely packed. I mean, how concerned are you about the second wave coming much more quickly than expected, given this pent-up frustration that we're seeing play out as these states reopen?

JASON ROTMAN: Yeah, I mean, listen, I'm not a doctor, but I'm just saying my thoughts on it. Listen, people need to be careful. I don't care if you believe that it's a conspiracy. I don't care if you believe on the other side. People need to be careful. And if you're going to go in a pool with 1,000 people and just be completely careless about it, I wouldn't do that with my family. But you know, flu season is coming up in the fall-- like, listen, how many things can we actually control? We're not going to hunker down in our basement 24 hours a day for the next five years. We just have to be careful. Just use our common sense.

AKIKO FUJITA: OK. Some good advice to leave there. Jason Rotman, good to talk to you as always.

JASON ROTMAN: Folk wisdom. Thank you.