Stocks are at the top of their current trading range
Interview: Raymond James & Associate---Saut, Jeff---Chief Investment Officer
>> Welcome back. the energy department reported its weekly inventory tkat kwrafpl the kraoeupb weighs less than expected. a modest increase. that along with terrorist attacks on a pipeline in iraq sent the price of crude higher by 13 cents. futures, as we said, were up. natural gas price vs. gained almost 3% in new york trading to $6.48 per million british thermal units. hot weather on the west coast and the shutdown of one of the nation’s largest nuclear plants also helped boost demand. our next guest says stocks are at the top of their current trading range and expects it to stay in this range for the rest of the year. jeff saut, chief investment strategist at raymond james, joins us from st. petersburg, florida. interesting forecast. we have to go back to the original one, the one we teased, jeff. that is the $30 a barrel lifetime forecast. we have seen oil oscillating down from the shocking highs that we saw above $40. $37 a barrel. never going below $30 a barrel again? why?
>> to a large degree i think it’s been an energy bull for the past 2 1/2 years as is our energy team out of houston, texas. where you stand is a function of where you sit, matt. in addition to being bullish on the eper skwreu space, i have been a dollar bear. i continue to be a dollar bear and measuring stick we use to measure oil is the dollar. i think the dollar is in a secular bear mark that will be interrupted periodically by rallies. i think the dollar will continue to go lower in terms of the world currency market .
>> it’s interesting because a% -plot of people i think have failed to―we have talked about opec raising its price brand and tarring. but because of the decline in the dollar over the past two years, an increase in terms of their price ban which is in dollars is kind of a waur. ao―a wash.
>> i wouldn’t disagree with that. that’s one reason i think crude oil will stay perky. that buoys natural gas as well as coal.
>> it’s interesting because you mentioned coal, you like oil, gas. there seems to be a theme here. why do you like these tangible assets, if you will?
>> well, i have been talking on bloomberg and other stations the past couple of years about tangible assets. i call them stuff stocks because i think there’s a secular bull market in stuff stocks. i have pretty adamantly been of the opinion that the fed would% -pbe successful in reinflating the economy and consequently i think there’s a bull market in stuff.
>> it’s interesting, one of the stocks you like is consolidated energy. the stocks had a great run this year compared to the markets , up 23% and another good day as well 2% today. 42% over the year. we are flashing the charts here. why don’t you tell us the story why consolidate energy now.
>> consolidated energy is an individual story. i think the macro theme on coal is it is plain cheap relative to oil and natural gas. natural gas ought to stay perky as long as oil stays perky. that probably will take natural gas away from a lot of the utilities in terms of the production of electricity and it leaves them with coal. so consolidated energy is one of the premier energy coal companies in the country. they have the lion’s share of the coal production east of the mississippi. i think that they’ll have dividend increases going forward as their earnings ramp. i think it’s a pretty interesting story along with the entire coal complex.
>> ok. we have about two minutes left. let’s talk about rates appear economics. the two are related. we’ll talk about economics first today. we saw the stock markets go nowhere in the face of amazingly strong housing starts or building permits data. a 30-year high. housing starts also strong, close to some highs there. we did see borrowing wallowing at a two-year low. but what is with the markets an the fact that they really don’t seem to care too much about economic data right now?
>> well, you know, again where you stand is a function of where you sit. after the huge secular bull run that peaked in 1966, the economy improved at roughly 6.7% a year for the next 16 years. the stock market went nowhere because valuations were yety high. i would make the argument that valuations are pretty high right now. few take the value line median p/e for the 1,700 stocks it measures, we’re back close to where we were at the peak of the bubble back in 2000-2001. it’s not that i think stocks will go down that much. i continue as i have for the past couple of years on your program to suggest that the markets will be range bound sraupbd to be more proactive in your approach and a better stock picker and better sector selector than you had in the 18- year bull market between 1982 and 2000.
>> jeff, you have to do your interest rate wrap in 15 seconds.
>> i think you will have less than a normal interest rate backup here because this is not your father’s typical business cycle.
>> i think you did it in seven. all right. that was not a typical interest rate wrap either. jeff saut, chief investment strategist at raymond james. pleasure to have you on. shares of bear stearns gained after they reported their results. we delve in to bear stearns companies as they’re officially known.
