Nasdaq --- Robert (slow)
NYMEX --- Su (fast)
>> julie, thanks. we are seeing another leg up and a reversal of what we have seen most of the last two sessions. the nasdaq rising for the second day of the past 11 and had dropped some 7.3% coming into today duringing that 10-day span where it had fallen nine day out of 10. the nasdaq about 1.25% right now and a number of traders including dave landry saying that we were oversold and due for a bounce. if you look at indicators such as the relative strength index, you will see they were indeed putting out a buy signal for the trader who is use the indicator when the white line goes down to the green or below, that usually indicates a buying signal for them. we have seen rallies the last several times on the nasdaq when we have seen the r.s.i. touch the green line, so it is something to keep in mind. so other traders, including michael panser, an independent analyst, who looks at the longer term trend for the nasdaq over the past several years actually and he says we have broken through from the lows of 2002 and there you see the red line going all the way up. it’s a weekly chart and just this week, in fact, we are moving below that line. he thinks that it’s the recent breach of the uptrend suggests the bull market may be over. and we have seen some rebounds in a lot of the groups in today’s session, but one thing to keep your eye on is the nasdaq here before the commodities is the indexes and the nasdaq composite price to earnings ratio much higher even after the selling that we have seen compared to a lot of the other indexes worldwide. you see the 26.8 time this is year’s earnings compared to the s&p, the nikkei, and the creeian kospi. it’s just 12 pimes forward earnings -- 12 times forward earnings, so pricy compared to the peers. and now these are some of the worst hit stocks during the rally recrntly. and joy global getting an upgrade and these are the ethanol plays taking it hard over the past several days. back to you.
>> all right, robert. thank you very much. in the meantime, crude topping back above $71 a barrel as investors move back into commodities as you can see the stock, i should say, crude owl future up $71 right now up more than 2%. we have su keenan at the new york mercantile exchange for an update.
>> it is as in somebody put up a sign saying come back in. it’s an active trading session behind me. we are now at $71.40, a 2% rise on the day. if you look back, we were at the level before last week’s big almost 5% selloff. gasoline trading now at $2.11 wholesale. still, it is a 2.5% gain on the day. and natural gas, while trading for different reasons seeing a rebound of 1%. ton day when you consider we’re about 60% lower, we are in the december. what’s the story? fimat’s john kilduff says the overall commodity selloff seen as somewhat overdone. he also believes that the bargain hunters have come back into the picture in yesterday’s forecast in which there were as many as six major hurricanes for the season that begins next week. a reminder of how much danger is in store for the markets . bill o’grady echos that view over reports of the refinery fire at valero energy. and ra louisiana cutting the gasoline production and completely cutting off the sulfur diesel and that is also playing a role.
>> all right, su. thank you very much. let’s take a quick break, everybody. when we come back, chairman ben bernanke and chris cox are both on capitol hill. we’ll talk about what they’re talking about next.
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Listen Interview: Hayes Miller---Portfolio Manager---Bearing Asset management
>> welcome back, everybody. emerging markets are now down for a 10th day. that makes it the longest losing streak in eight years for this group. joining us to talk more about this is hayes miller, a portfolio manager over at bearing asset management. they have $37 billion under their management. first off, what is―what has sparked this round of selling?
>> well, suzy, i think what’s happening as you’re getting a standard consolidation period. if you look at the history of emerging markets relative to develop markets , you have somewhere on the order of four to seven-year runs of 20% per annum plus, or underperformance. since 2004, we have been in a solid uptrend and we think that’s more to it. but you have these periods of consolidation where the market , particularly the most risk diverse investors get shaken out. there are big issues with inflation scares, so i think that’s been what’s really driving the selling, and a normal consolidation period might look at something like a 10% relative fall against developed markets . that’s what we’d expect out of this.
>> but you’re calling it a normal consolidation? is that really the case or is this a change going on? is this some serious cash that is being moved into less risky assets? we have seen a selling of risks over the last several days.
>> you know, what’s getting sold off are the materials-related companies in particular and of course the emerging markets are very well supported by materials companies. those seem to be the ones getting hit the hardest. so the question you’re asking, it seems as one, are we looking at a structural change in the commodities cycle? we don’t believe so. we think we’re snil a long super cycle, and that if commodity prices are about to fall off to any significant degree, then we have bigger issues than what we are seeing going on today with, you know, with whether the fed has to go another half a percent or so.
>> have you been then in taking advantage of this sell-off? >> well, what we have now is emerging markets . probably going to finish out this run at something like 20% valuation discount to develop markets . 20% discount right now seems unjustified to us. we would have expected that valuations should be running at about par. so, yeah, we’re looking to pick up some bargains we think at the end of this sell-off.
>> where do you think you’re going to find those bargains? what areas are you looking at specifically?
>> well, looking like asia. certainly looking like, you know, india. our guess would be that there’s some tech names that are being sold off in asia, along―just because of the issue that i mentioned earlier about redemptions in large caps needing sold that may be able to be picked up at a bit of a bargain at the end of this. and i think the materials companies are still going to be making quite a lot of return for their shareholders, at even -- even at raw materials prices that are maybe 5% to 10% lower than we had recently. so, you know, we have to give this―i think we’ll find some nice deals.
>> nonetheless, we have one trader telling us the reason they’re seeing bonds rally is because people are more concerned about growth than they are about inflation. and i know we have been talking about the possibility of stagflation. how does all of that fit into this sell-off that we are seeing?
>> yeah, well, you know, that changes by the week, i guess. we certainly saw bonds behaving horribly last week. so i think that’s going to be a day by day issue. we’re going to have to watch the data as it comes out. stagflation is a real potential in this situation. and i personally see a lot of similarities to what we were looking at in the ‘70’s when we had the last real spike in materials and energy prices. so i would expect that that’s going to be the scare for some time. slower growth, slower earnings growth from compression of input prices rising faster than output prices, as well as potentially higher interest rates to keep inflation at bay.
>> are you going in and then buying the commodities? is this an attractive level to get in at something that you haven’t on the last run-up? >> yeah, possibly. the question is how you get the commodities. we don’t particularly subscribe to the idea that commodities aren’t a good investment. commodities have every reason to go up and down in value for fundamentals, and we think that’s a lot of demand right now for commodity―continued demand for commodities. but we like the leverage that you get from buying in commodities-producing companies and we found that in brazil and australia and parts of asia that are being sold off pretty dramatically. i would think it’s a case of finding good companies in the sector are preferred.
>> thanks very much for your time this morning.
>> thank you, suzy.
>> hayes miller from global equities over at barring asset management. please stay with us. we’ll talk more about commodities again.
