Focus on the jury--Alan (slow)
View on the markets
Interview: Advisors Financial Center---Lieberman, Chuck---Chief Investment Officer (slow)
>> well the jury deciding the fate of ex-credit suisse first boston banker frank quattrone has concluded their deliberations for the day. alan dodds franks has been following the story. he joins us with the latest. alan?
>> a dramatic development just moments ago when a defense lawyer informed the press that the jury has apparently send out a note saying it is unable to reach a unanimous verdict on any of the three counts against frank quattrone. we’ll have to wait until the transcript of what was said in chambers come out―comes out to be able to give you the full details of what transpired. the government hasn’t yet confirmed that this was the casmse frank quattrone and his lawyer left the courthouse just two or three minutes ago, smiling, but not saying anything. quattrone was―or is facing three counts―obstruction of justice, obstruction of agency proceedings and witness tampering. two of those three charges each carry a 10-years in jail penalty and the third one, five years in jail. although, if he were found guilty, he would be expected to serve no more than two years. however, right now, things are looking real good for frank quattrone, based on the jury’s demeanor. earlier, they send out a note saying they wanted to leave by 2:00 tomorrow. now, the judge has ordered them to come back at 10:00 a.m. tomorrow and he may well instruct them one more time to try to reach a verdict. but at the moment, the news is the jury says it’s still deadlocked. lane, back to you.
>> alan dodd frank, thank you very much. the s&p 500 has gained 29% since this year’s low on march 11 and while fourth quarter growth is expected to accelerate to 22 boy 6%, some investors say growth is already reflected in stock prices here. where are they headed? chuck lieberman is chief economist at advisers financial centers. he joins us now with his view on the markets. thank you for joining us.
>> sure.
>> let’s talk about this. a lot of people look at the numbers we’re seeing now and see a repeat of what we’ve seen in the past and think that things are a little bit irrational here, especially with the earnings numbers we’ve been getting from key companies that have not been terribly bullish on their future at the moiment. what is your sense of the market here?
>> i think that there’s some truth to that. some of the technology companies remind me of the bubble over the years and i think there’s some companys thats are pretty expensive. at the same time, there are plenty of others that are really of value and obviously you don’t have to buy them all. you can pick and choose so you can buy the ones that offer value.
>> they’re buying ebays and all these other internet and technology names that on the anticipation that very good things are coming.
>> sure.
>> is that poor judgment here?
>> in my judgment, yes. i think they’ll go over the edge of the cliff one more time.
>> what is the fundamental strength of this market right now, is it the economy?
>> it’s definitely the economy t. economy is turning around. we’re going to shortly get a g.d.p. number for the third quarter. estimates are now at 6% or even better. fourth quarter could easily come in at 4.5%, potential little more. i think the economy clearly is on an upward path and before long, we should start seeing job growth. so, we should be hitting on all cylinders.
>> when do you expect to see job growth? that is very important to a lot of people who don’t fully believe in this recovery.
>> that’s because they look backwardses as opposed to forwards. we did see a gain in jocks last month. it is likely to be continuing in the current quarter. i would expect that we’ll see an increase in the pace of job growth and secretary snow is probably not going to be far off in his hope that we’ll see 200,000 a month. i don’t think we’ll see that this year, but next year sr. a good bet.
>> you’re saying the economy is moving in the right direction, things look good on a fundamental standpoint. on the other hand, you’re recommending a couple of stocks that people bough when the economy is headed south. do drug and health care industries did particularly well while others were tank. but you like merck and pfizer.
>> right. it is simply a valuation issue. in fact, the interesting comparison is pfizer compared to microsoft. microsoft just reported earnings, obviously pretty good numbers. they’re still making a lot of money. but the fact of the matter is, as good a company microsoft is, it’s trading at 25 or better times the earnings. in contrast, you have pfizer growing faster than microsoft and yet it’s trading at a lower p/e multiple. in fact, it’s a lower p/e multiple than the market as a whole. no question pfizer offers better value. a meaningful dividend as opposed to a token dividend from microsoft. there’s no comparison.
>> when you look at some of microsoft’s numbers today, what is your sense of it going forward? you mentioned microsoft because, of course, the numbers came out today. do you have any reaction to them?
>> my bottom line sense is that a penny more, penny less doesn’t matter. it is a great company and a very expensive stock and i don’t final that of interest.
>> let’s talk about merck a bit. you mentioned pfizer and the relationship there. merck reported disappointing earnings yesterday.
>> that’s right. and they easterly likely to be slow in terms of earnings growth. but when you buy a pharmaceutical company, you’re buying the r&d capacity of the company. merck is a long-time quality r&d operation. they don’t have very much in the pipeline in the near future. but i’m basically making a long-term bet with merck that long-term they will come up with great drugs. and if they don’t come up with them internally, they’ll buy them from outside.
>> a lot of people pointing to this issue of canadian drugs coming over the border there and the pressure there. that could cut the bottom line.
>> absolutely. we’re likely to see some leveling of the differential so that u.s. prices might come down, overseas prices might go up.
>> all right.
>> ok.
>> charles lieberman. sorry we don’t have more time. chief economist at advisers frnls center. well, the federal probe into the relationship between mutual funds and brokerages gets deeper. this time, it involves marketting practices. details coming up when the “world financial report” continues. stay with us.
