Ted Oakley, Oxbow Advisors Managing Partner, joins Yahoo Finance’s Kristin Myers to discuss his outlook on the markets as Goldman Sachs predicts the S&P 500 could surpass 3,600.

Video Transcript

KRISTIN MYERS: We're also seeing retail stocks rising on the news that retail sales rose in the month of July. Retail sales rose, actually, for the third straight month-- they did miss estimates-- rose 1.2% versus 2.1% expected. Most categories did see gains, but weak auto sales did hold up those topline figures.

And in stimulus news, those talks continue to remain stalled. Donald Trump actually tweeted out earlier today, quote, that he had directed treasury secretary Steve Mnuchin to get ready to send direct payments, $3,400 for a family of four, to all Americans. He then went on to say in all caps that Democrats are holding this up.

Democrats have made concessions, slashing about a third of that roughly $3.5 trillion package that they wanted, but insisted on keeping assistance to states, cities, and other local municipalities. Now, the president has rejected both the topline number, and said that he would only be directing about $150 billion in local assistance.

And in the coronavirus news, case counts in the United States now just under 5.3 million. New cases are on the decline by about 18% over the last two weeks. New deaths are also declining by 7% over that same time period. And while case counts are on the decline, we are seeing the decline also in those hotspot states of Florida and Georgia.

But I want to continue here on those retail sales, because, even though we have a pandemic, people are still continuing to buy things. Sales data again, as I said, missed estimates, but have now risen 2.7% versus the same period of last year-- so holding on to those year over year gains. So for more on this, we're joined now by Ted Oakley, Oxbow Advisors managing partner. Thanks so much for joining us, Ted. So those retail sales missing estimates. Are you still looking at this report positively, though?

TED OAKLEY: Well, it's what I thought it would be, Kristin, when you look at it. And I mentioned that I think people were probably more optimistic in June, because they've been told all along that, you know, when the summer months come out, maybe the COVID drops a bit because the heat, et cetera-- and it really-- it did to a certain extent, but I think it kept people in the series where they thought, well, maybe, maybe not. And so I won't-- I'll decide not to spend as much money in July. And I really think that's what's happened here.

KRISTIN MYERS: So obviously, you're saying that people realizing that we're not coming out of this crisis quickly, which lowered those July figures. But if I were to ask you to pull out your crystal ball, what would you say is going to be happening for the month of August, especially because we saw that unemployment boost-- that extra $600-- that went away. Stimulus talks right now have stalled, don't seem to be going anywhere. Do you think people are going to be really tightening those purse strings this month?

TED OAKLEY: It's a little hard to say, Kristin, because, typically, August surprises people a little bit anyway. Because normally when you're going back to school, you pick up quite a bit in retail sales for that period. This year, though, a lot of schools are not opening. I have no idea how that's going to come in. I would expect that it wouldn't fall off a lot. But I would also be surprised if you had another month like June, because I think people, with what's happening now-- and unfortunately for Congress going on recess, the people that might be buying some things, they're going to have to really tighten down, even if it's for two, three, four weeks. They just don't have the money coming in now.

KRISTIN MYERS: So let's look over at the markets. They-- I mean, NASDAQ in the red right now, but they have been doing pretty well, some folks saying disconnected from what we are seeing in terms of fundamentals. What do you think is going to be happening going forward, though? As I mentioned off the top of the show, stimulus talks have essentially gone nowhere in Congress. If we don't get a deal done next week or the week after that, the market seems to have priced in the reality that some sort of deal is definitely going to happen. But if we don't get one soon, what do you think the markets-- how do you think the markets are going to be reacting?

TED OAKLEY: Kristin, I think you're right on. I think the markets probably felt like that, hey, we're probably good till election time. We'll have enough money to keep things going for that sort of period of time. And now, with nobody there, you know, the markets are probably going to have to relook at that.

And the thing to remember, too, is the markets always change after Labor Day. And you really start to focus on the election, because you get two months away, and it gets very volatile. So that would not surprise me to see that factor in in here.

KRISTIN MYERS: How much of a risk do you think the election is going to be this year?

TED OAKLEY: I didn't hear the first part, Kristin, I'm sorry.

KRISTIN MYERS: I was saying, how much do you of a risk to the market do you think the election is going to be this year, especially now that we have Kamala Harris as Joe Biden's VP pick?

TED OAKLEY: Well, personally-- just personal opinion, I don't think it was a surprise to me, anyway, that Joe Biden picked Kamala Harris. And I'm not certain it was a surprise to anybody else. I think what would happen, though, is there's a lot of things up in the air about people thinking one party would win, the other party would win.

I think the biggest situation you're going to get into is the markets are more expensive today than they were on the February 19 high-- easily. So anything that throws it off at all, election or whatever, it can come quickly, and you get into trouble in a hurry.

KRISTIN MYERS: So I'm glad you mentioned that the markets are a bit overpriced right now. Do you think that we're in danger, perhaps, of a correction anytime soon? How big would that be?

TED OAKLEY: Well, I haven't put this in writing, Kristin, but I would say this. That for the first time, really, for us, since February, I think where we could have, you know, 10% or more anytime. It wouldn't surprise us to have that come really swift and sure in a short period of time.

If you'll notice, the bonds have started back up-- the rates have. You know, they've pushed quite a bit in the last three weeks. And people-- the dollar's been falling, gold's been going up. You can tell there's-- in the air, there's a feeling of uneasiness right now.

KRISTIN MYERS: And looking over at the S&P 500, as I mentioned, it had been, you know, looking that record closing high right in the eye. It's retreated a little bit since then. But Goldman actually saying that we could see a level of 3,600. What do you make of that call? Do you see that much room for the S&P 500 to run right now?

TED OAKLEY: Well, as a firm, Oxbow doesn't forecast. And I know the graveyards are really full of people that forecast, because it's a tough trade to do. I mean, you know, you have to put out something. It actually would surprise me to do the 3,600 number, really, from here, but you know, it could. I would say that for most people, you know, they need to really set their portfolios based on what kind of risk they think they can take right here, regardless of whether we went higher or not.

KRISTIN MYERS: All right, we'll have to leave that there. Ted Oakley, managing partner at Oxbow Advisors-- thanks so much for joining us today.

TED OAKLEY: Thanks, Kristin.