CME Group’s Blu Putnam and Ally Invest’s Lindsey Bell join Alpha Trader

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher first talking with Blu Putnam, chief economist at CME Group, and then with Lindsey Bell, chief investment strategist at Ally Invest.The strength of this wave of the coronavirus has surprised Putnam, who says the economic recovery will now take longer than he expected when he last appeared on Alpha Trader back in August. He also takes note of the uneven nature of the recovery and says traditional central bank stimulus - lowering rates, buying assets - isn’t necessarily suited to the task. Instead, he says, fiscal stimulus - targeting particularly stressed areas of the economy - is what’s needed.It’s no secret that markets for the moment are looking past some nasty news on Covid-19, and instead focusing on 6-12 months from now when a vaccine might be begin to take hold around the country (and the globe). Fair enough, says Putnam, but he believes markets are also pricing in as many as two rounds of fiscal stimulus - one this month, and another perhaps larger package after January 20. The combination of government action and a vaccine should be highly favorable in particular for the cyclical sectors like energy (XLE), industrials (XLI), and financials (XLF).While there will be near-term bumps in the road in terms of bad Covid news and its effect on the economy, Lindsey Bell also believes investors are looking over that valley and seeing vaccine availability and fiscal stimulus as reasons to be bullish about 2021.Maybe not talked about enough is the enormous amount of “dry powder” being held by the U.S. consumer, even as the economy remains soft and fiscal stimulus benefits run out. Bell notes consumers this year have been building savings to double-digit percentage levels, sending retail deposits across the banking system to a record $15T. While there surely needs to be a near-term fiscal bill targeted at those most hit by the pandemic response, Bell says a viable vaccine is liable to unleash an explosion in spending next year as consumers look to move some of that massive savings stash. The sell-side 2021 consensus S&P 500 EPS forecast of $167 might prove too modest, suggests Bell.Bell is particularly bullish on the Dividend Aristocrats - names in the S&P 500, but those that have been paying and raising dividends every year for at least 25 years. Over long periods of time the Aristocrats have nicely outperformed the broader index (assuming reinvested payouts), but that hasn’t been the case this year as big cap tech and work-from-home names have done way better. The gap has narrowed a bit since early November (alongside vaccine optimism), and Bell expects that to be just the start of a move for the dividend players. One of the better-known ETFs for playing is the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).There’s plenty more, including Putnam throwing a little shade at the Black-Scholes options pricing model as he describes the CME’s new Group Volatility Indexes ((CVOL)), and Bell reminding that financials might return to hiking dividends next year as the Federal Reserve lifts pandemic-restrictions on bank payouts.Learn more about your ad choices. Visit megaphone.fm/adchoices