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Margie Patel, Wells Fargo Advantage Funds senior portfolio manager, on the Beige Book report and market activity.
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Well our first guest says that despite today's gains the market is in the midst of a correction but.
That might not be a bad thing joining us now is Margie Patel wells capital management managing director and senior portfolio -- so Mardi is this that that I mean obviously the last few weeks become more more challenging for the market is this that in the midst.
Pause that refreshes that Wall Street always thoughts about.
Yes it is I think is a pause before we see earnings.
And so many -- -- so far that even though the fundamentals are attractive it's hard to get excited about a stock that's up you know 204050%.
Year to -- so I think we need little pause.
Now that we we OK you know a lot of times we talk about applause but.
What about the reasons for this particular pause.
Some worries initially that the feds out of it and in other words or perhaps our economy is not going as fast -- a lot of people bought.
-- are these easily dismissed.
Well I think we do have a mini growth scare once again where people -- worried about.
The latest unemployment numbers and make them look a little slow worried about China of course we always have Europe to be worried about.
But I think that the it's not going to be material and keeping stocks did have a serious correction I think after mid year will start to see our economy and the Chinese economy.
Re accelerated I think that'll be the drivers take stocks back up to higher level.
Marty what about -- a low expectations.
For earnings season I mean I think everyone was waiting for the sky to fall before Alcoa's earnings yesterday.
They came in net not half bad part and it was because -- that China story but I'm with our expectations so low is their potential for an upside surprise.
This season.
Yes I think so I think the best way to get stocks to go up is to really expect disappointment and after we get out.
Then now we have that certainty of the -- -- levels and I think the week that would be another factor that would help stocks to base out and do better.
I know you are expecting a correction -- taking a little bit of pods in this correction if you will but I'm at up until now investors have been -- and staying away from treasuries I mean.
Wouldn't contrary now parents say that maybe this is a good time to get into treasuries as we we out this correction and make a little bit of money and then -- put ourselves back into the game once we see.
An uptick.
No I think treasuries don't really have much attraction for investors.
The absolute yields are below the ten year treasuries more or less flopping around 2%.
And really big dividend yield of the Standard and Poor's is about equal to that in many many stocks have higher dividend yields so you're getting paid while you wait so I think the better strategy would be to look for good opportunities to increase exposure in companies an attractive sectors.
If you're more income oriented they're planning a dividend opportunities out paced away yeah right and that's what -- what are you a -- on right now.
I think the economically sensitive sectors and that would include everything from financials a sector I'd been avoiding the last couple years but I think they have turned the corner on the upswing.
Technology industrial capital goods.
And I think energy which has been rather mixed for many many holdings I think also is poised to do much better especially the energy service stocks again in the second half of the year so lots of areas or attractive investment now.
Margate -- -- do's and don't see you mentioned -- take modest risk and acted to look for modest returns.
How how the way our audience can sort of assess risk -- -- something we talk about a lot.
How would you assess modest risk.
Well we often only find out what was risky after we bought out.
But I think there's so many good quality companies.
And I would say American companies across the board are globally competitive.
They are transformed from where they were five or ten years ago as far as see hyper competitiveness.
Citing the risk global is is very low from American companies.
And we have a short term price risk but we have -- -- about Europe or China or some such thing but.
-- -- bottom line you're getting paid to make investments when you have -- such as we had over the last week percent.
And before I let you -- we've only got a few seconds left the narrative that you're trying to share is that we are gonna have a dip their natural and don't necessarily panic in fact even try to take advantage of the yes the risk taker will be rewarded over the next year all right you're fantastic as usual Margie -- wells capital management thanks a lot.
Thanks -- prices --
