September 14, 2020
The fundamental outlook continues to improve on a stronger than expected economic recovery, earnings recovery (evident in recently constructive forward guidance) and positive balance sheet/ liquidity trends. Last week’s pullback was most acute within pockets of Tech where positioning had become overcrowded. The lowered guidance from CIEN the morning of 9/3 was the catalyst for the sell-off, but is the only large cap Tech company thus far to do so. The sell-off has driven many secular growth companies with the strongest fundamentals close to short-term oversold levels and it seems likely these names will reestablish leadership in the weeks ahead. We’re also highly constructive on cyclical/value stocks that pay sustainable dividend yields.