Market week
>> i expected the market to peak roughly with the end of fed tightening, and i think what you see beyond that is a major correction, because you’re going to see multiples compress. so i don’t see a rebound in the near term. i think it will be an 2007 story.
>> we’re going to get into a situation where the economy loses momentum, but the fed is not in a position to reverse policy or at least even to change rhetoric, and the consequence of that is that it’s going to be very difficult for stocks.
>> my goodness, a major correction and a very difficult situation for stocks. that was a couple of kind of ominous forecasts. so we bring back in robert weissenstein, the c.i.o., chief investment officer at credit suisse private bank. they’re kind of bearish. what do you think of that?
>> well, i think that you can make the case, at least in the near term, as we’re faced with this uncertainty in the markets that the markets may be a little bit difficult. but overall, the fundamental case for investors remains fairly strong, and we should be able to pull out of this. the next couple of months, as we enter into the summer again, could have some lack of clarity and some more difficulty. but we tend to be pretty positive.
>> let’s talk about commodities, gasoline in particular. is $3 gasoline finally going to do what the textbooks in business school would claim that it should do?
>> well, you would think it would. the consumer has been remarkably resilient through this process. when i take a look and try to think that through, it’s almost as if they’re trying to spend their way through higher prices, thinking that they won’t last. ultimately, filling up a car or suburban at $80 or $90 a tank is meaningful, and you can only do that for so long without reallocating some of your other spending. if prices do last, i think you’re going to have to see the consumer reallocate and slow down a bit.
>> it’s got to be frustrating, because we keep saying that and it ain’t happening.
>> it has not happened. the consumer continues to plow through. i think that that runs around the general environment where the job environment is good, consumer confidence is decent overall based on what the job and employment environment has been for a while and continues to be.
>> let’s talk quickly about gold and industrial metals. they ve been volatile as well.
>> yeah.
>> boy, there’s a real split in terms of whether to go in now or to take your money and run.
>> depends what story you believe in terms of where the world is headed right now. we’ve had a lot of financial players in the copper markets , and all of the industrial metals and oil markets and gold, but the reality is taking a look at the fundamental drivers, which should be strong g.d.p. growth, not just here, but china and elsewhere, should create demand over the long term that is supportive of prices.
>> so the weissenstein theory of ignore the noise, look at the big china story, you’re still buying gold, you’re still buying the metals?
>> well, focused more on the industrials and the precious metals. i think that you can make more of a case for the industrials because there’s traction to the use and you can really drive it into infrastructure built out on a global base. particularly in china.
>> two minutes, two topics, geography and groups. let’s talk about where in the world to put your money right now.
>> well, there are a lot of interesting places. if you take a look at the global trends here, obviously we just mentioned china. that’s not a one-quarter story. so even if you can’t play china directly, playing non-japan asia is really interesting because they’re huge beneficiaries of the growth dynamics. secondly, japan, for the first time in 15, 16 years we’ve seen real traction to the turnaround story. we’re worried about inflation everywhere else in the world. we’re delighted to see it show up in japan. that’s a positive that will create very different investment dynamics. in europe, germany looks very interesting. change in the labor markets , change in consumer habits, and that should be a positive. and i wouldn’t underestimate the u.s. markets even if we have some near-term difficulties.
>> in the very near term in this recent bounce in the market , i did a piece on the techless rebound. that’s a source of concern for some investors, that technology really didn’t participate in the rise in the market .
>> yeah.
>> what looks good out there and what looks bad?
>> well, if you take a look around the sectors that could be attractive, again, you believe in growth, you believe in efficiencies, you believe in globalization, and technology’s got to play an increasing role. you take a look at some of the groups that have sold off, particularly in this correction, i said before, that’s opportunity. take a look at some of the semis, software companies. anything that a business can use and actually can spend money on it―remember, cash balances are pretty healthy at most corporations here right now. they’re at very high levels. where there’s capital spending, where it can be directed towards more efficient ways of doing business, i think that’s going to be an interesting play.
>> so you have no problem picking the fallen angels here. you mentioned semis.
>> yeah, i think actually make some plays there. valuations have gotten more interesting, and you just have to be sure that you’re in the right companies.
>> robert weissenstein, thank you very much. we got a lot done in as much as we could. going to take a quick time-out, and then wrap up the week that was and tell you what you need to focus on for the week ahead, as we do on the aptly named “marketweek”.
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>> we’re back, folks. the federal reserve this week releases minutes from its most recent policy meeting from earlier in the month. if the central bank’s last statement is any guide, then these upcoming minutes should make for pretty interesting reading, too. economists are in agreement that the fed is probably close to the end of a two-year-long rate hike campaign, but the question is exactly when is it going to end for real. minutes from the may 10 open market committee meeting are due out on wednesday, and they could give some clues along that line. now, since that meeting, the yield on the 10-year has fallen, actually, down just about 5% from over 5.13%. meantime, the latest reports on economic activity for may are coming out this week. the focal point will be the big one on friday, the monthly jobs report. economists are looking for 170,000 new nonfarm jobs for the month of may. that’s up from about 140,000 the month before. the unemployment rate forecast to hold steady at 4.7%, but some say it’s going to be a positive sur
