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Cetera Financial Group Market Strategist Brian Gendreau and Option Pit Mentoring and Consulting’s Mark Sebastian on the impact of the Fed extending ...
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Brian Jim -- here market strategist -- -- terror financial group to give us a sense of what you thought of this move and what you think of how it will affect the markets and people stocks were watching right now.
-- I think on balance will be slightly positive.
If there was a little bit of disappointment today it was on the part of those who expect maybe a little bit more from the Fed.
What the Fed did extending Operation Twist was pretty much in line with expectations.
Is it gonna make much of a difference on long and I think -- console debating this for years to come.
Mainly because we had a flight to quality going on at the same time which is kinda swampy effects in the long in for market Operation Twist.
It will reduce the cost of capital firms send cost mortgages consumers a little bit it helps I think it's more the Fed had not done this it would have been disappointment well.
But again there's has Milton Friedman says no such thing as a free lunch everything you do particularly through the Fed.
Affects some things won't -- -- with what's the negative side of it is there're negative side Operation Twist.
-- not really.
It's it's really more a rearrangement of the Fed's balance sheet rather than providing much more the way of liquidity and Milton Friedman didn't.
Advocates of provisional equity at least the case in Japan when interest rates were low there he thought it would help their economy.
Are -- let me go back to.
CME and getting a real sense of what's going on marketing to how did the traders react because we saw.
Should spasms initially mean with the Dow falling precipitously down about more than ninety about 9295 points initially and then gold started plummeting 22 dollars oil fell about two and a half and then by the end of the session down more than three.
What was it that -- them so much was -- the fact that the Fed sees a slight -- higher unemployment rate and slightly lower GDP second biggest drop anybody.
No I think there -- a lot of things I think you had -- If it.
Did the financial markets -- it was kind of like Christmas morning and they got the second thing on their Christmas let's not the top -- five hours of people coming up.
Don't think particularly if -- -- and and this and that and they're like no way.
And I put that we didn't get it's like -- -- like that but garlic it's only gets Alexis 37 needs that before.
In what is you know I was gonna say succeed you know the -- Easy bake oven and hearing a lot higher than Miami yeah no well enough to -- I've I've been a lot still out about my my suite 16100 complex supersonic and how to -- -- fix my portfolio -- of all of this uncertainty about what's going on.
Well I don't think you do at least this year have a substantial allocation to equities this and certainly we don't think -- tend to get out.
It's not the time to leverage up and take on huge exposures either though.
We didn't -- -- a lot of uncertainty between serving now and into the year to the election year Europe's not out of the woods that the fiscal cliff coming.
But I think the valuation for story for equities by any metric is still pretty good.
And equities have actually done fairly well in periods of slow growth on average and quarter the slow growth equities have gone up five point 2%.
And we think getting out of equities.
And we we also like diversification fixed income alternatives but we think getting out of equities this point would be a mistake.
OK so market and thinking how do you feel about that question what do you see an end equities certainly give you better at least some of them to be a better return if you're looking at -- -- the literally -- yeah.
-- -- begging you to buy dividend yield stocks snow.
That's the play right now is you know we've seen we saw the big sell off today which means option prices are coming in.
Now there's still a major risk of some sort of major plot out of Europe so I -- just -- flat long equities because.
We could it you know one bad thing out of Greece Spain Italy and yes indeed -- -- and thirteen 58 at 1215 a week.
So how do you play at.
-- you go long equities and then -- stock collars on you can buy protective puts with a big sit eighteen and I think actually probably.
Heading toward sixteen you can get that insurance relatively inexpensive and along the equities against it.
That be the way I would probably cockroach not a bad not a bad solution Bob Bryan -- road mark we're gonna see you when the S&P futures -- thanks both gentlemen.
