Saxo Bank CIO Steen Jakobsen joins Yahoo Finance Live to discuss retail sales, market dynamics, meme stock speculation, and Fed tightening.

Video Transcript

BRAD SMITH: All right, guys, and switching gears back to retail. Retail continuing to run markets this morning. Target's miss tempering early earnings optimism seen from Walmart and Home Depot. Retail sales data adding to that picture.

Let's step back and take a broader look with Steen Jakobsen, who is the Saxo Bank Chief Investment Officer. Steen, great to have you here with us this morning. As we are continuing to evaluate what this all tells us about the mindset of the consumer, what would you extrapolate from both the economic data, as well as the earnings reports, to really kind of paint the picture of exactly where consumers find themselves as a part of the economy right now that is 2/3 driven by them?

STEEN JAKOBSEN: So overall, the consumer is in fine shape. And what you find in terms of the actual reporting, you find a very scattered sort of picture in terms of how the companies are doing. Some people-- some companies clearly has been left with too much inventories in this cycle. And some of them, of course, have been stacking up, too, simply because one year ago, even getting commodities and goods on the shelf was a big issue.

But overall, the private sector balance sheet has been shown to be extremely resilient. You see that through the credit card spending. You see that through even the economic data that comes out of the Federal Reserve and the Bureau of Statistics. So for me, this is just another example of how the market is clearly moving into a stock picker's market more than a momentum market.

BRIAN SOZZI: Steen, let me push back on that because we've seen a lot of momentum over the past week on these meme stocks. It's been a very confusing names. We've been highlighting all morning long Bed Bath & Beyond seeing some big moves and a lot of cash plow into AMC and GameStop. What is driving this?

STEEN JAKOBSEN: It's the euphoria, basically. If you want to really create a narrative, I don't think stocks like that need a narrative in itself because it's like a game. For a allocator like me, I don't even spend more than two minutes a day concerning myself with the meme stocks and the like. But if you want to find a rationality for what goes on, it's basically that the soft landing is going to work for the equity market.

We have a free ride in terms of the maximum interest rate that we'll see. And on top of that, then you clearly get what we in our business call convexity plays. So as interest rate and volatility comes down, these stocks become extremely attractive for short-term speculators. But let me stress, this is entirely speculative. You can just as well go to the casino and put all your money on black.