The U.S. stock market is taking a hit on Friday amidst concerns that the new COVID variant the WHO is calling B.1.1.529 could be more resistant to the existing vaccine. But Ironside Macroeconomics’ Barry Knapp is convinced the market sell-off is a buying opportunity.
Highlights from Knapp’s interview with CNBC
On CNBC’s “Squawk Box”, Knapp said the market “might be” overreacting to reports of the new variant as he recommended buying the dip in the hardest-hit sectors. Naturally, “financials” was one of his top picks.
We have serious uptrends going on in yields because the economic activity is getting better as the Fed is likely to accelerate taper. A whole myriad of reasons why rates ought to go higher, and that’s good news for financials.
According to Knapp, COVID waves have so far failed to cast much of a negative impact on economic activity this year. Other reasons he likes financials include credit demand and valuation.
What else is a buying opportunity today?
Another sector that particularly seems inviting to him is “energy”, which slid sharply this morning on an over 10% decline in oil prices. Making his bullish case on energy, Knapp said:
Energy has positive revisions; the release of the SPR to us is not a significant event. Unless you bring economic activity to a halt, the energy market’s going to get tighter and tighter policies in your favour for being long energy stocks.
The S&P 500 Financials and the S&P 500 Energy subindices are down roughly 4.0% each on Friday. During the same interview with CNBC, Decatur Capital’s Degas Wright also agreed today’s market sell-off was a buying opportunity.
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