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U.S. Manufacturing Shrinks

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    Steve Wood, Russell Investments chief marketing strategist, on manufacturing, financials and retirees.

  • Duration 5:03
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Take the blame for everything around here.

I disappointing read on manufacturing actually can't take the blame for that that's economy activity shrunk in June.

For the first time in three years is as a signal -- did -- US economy that's headed toward recession joining -- not a way -- is Steve let.

Chief market strategist at Russell investments.

While certainly wasn't a good read into the that happened that the -- has been mixed to soft.

But over the last couple -- before this one it was no slightly positive so I think it continues on.

It in a slow growth environment probably not a recession just -- I think a recession or calls premature at this point but it is going to be -- -- -- stumble is once again signal of the slowdown in China and the troubles in Europe making their way to the US now or is -- problem organically in the US -- -- it to stop -- together -- I think it is for -- -- all tied -- together but I think -- you're -- what -- -- well represented -- -- -- -- China.

Because you're gonna grabbing the headlines there's some great stories -- political lines going on but China the slowdown in China's very material.

It was self induced -- the Chinese Government over last no two and have almost three years has tried to slow down their economy they had no bubbles in housing and rent and shares market as well as.

-- inflationary problems so that's beginning to hit so what is a landing in China we're -- the implications it doesn't necessarily need to be recession here.

But but you are seeing some distressed by trying to and I think there -- more more people coming to back consensus point of view that we're seeing things slowdown -- -- you -- delighted that witty and the market goes as a result.

I think for a sub don't overreact to short term information I think you're gonna need to have a longer term.

Investment discipline the longer term horizon.

I think for most investors it's going to be a globally diversified multi S strategy where you need to use time.

And in good stock picking minority who -- to add to the return your portfolio start with the US.

You know the economy here -- might be elected a compliment we're doing better than Europe.

We're doing -- than China so the United States is from -- macroeconomic perspective.

OK -- and the companies in -- states are doing extremely well.

Earnings are gonna slowdown but that said last year was a record year this -- likely to do a bit better so I think there's more visibility.

There you can get a better hold -- a balance sheet a business model United States and you can certainly your right.

But here's my concern if you are about to retire -- obviously I'm -- discretion interest rates so -- -- not being paid anything -- your savings right now then what's the strategy if you don't have the time.

Then you need to extend your time horizon is probably -- the answer people are gonna need to work longer save more because they need to have discipline fill that gap.

In a lower interest rate environment the first and have faster paying stocks -- people tells the dividends more than defensive -- if you're shaking your head at me like you -- -- but but part.

-- dividend stocks yes but you don't want to overplay it if it's getting to be a crowded trade.

Valuations are ultimately going to be very very important I think for people that are approaching retirement.

They're gonna need to look at the fact that if there in the sixties and they're healthy they probably have a quarter century of life -- ahead of them.

So getting really overly they're getting overly cautious overly conservative overly young.

Means that -- a big risk to the portfolios is that they might outlive their cash so right now that would be a non trivial risk that they need need to look at.

But if if they are risk averse then maybe work a little bit longer but I think in the low return environment you're gonna mean though globally and it's going to be a sophisticated.

Purple on the flip side of that you're not near retirement would you add -- -- -- -- -- is this not the time to -- getting deeper into the market.

It depends -- the market is it equity space we do like the US we don't love -- there's nothing that we really love right now.

Fixed think I'm safe haven plays especially in the -- it's a very very expensive passed something -- look at as -- -- What the boom that in the US tenure their kind of jockeying for position when the German ten year -- -- higher yield in the US that would be an -- a development in in here.

But you don't want to overpay for anything right now if you're overpaying for security you're overpaying for peace of mind.

Just understand that your overpaying -- gonna need to look into a diversified equity portfolio look at the US -- you base camp.

And then they do go on that journey around the world pick better stocks do your research can be discipline is going to be -- -- But there are opportunities out there so -- Living longer that's good news and he mentioned just work longer to increase your investments -- fortify your investment -- that obviously.

Leads me to think about the jobs report showed on Friday -- you had this consistent flow of weakening economic news what is your take what is your forecast I think the economists.

A surveyed are looking for 90000 payrolls added and what kind of market impact -- That seems about right now than the number that we got last month was very a troubling but I think more than though the the headline number that we're gonna get on Friday is the revisions to previously that's been the story -- that -- news -- Souza revisions to -- -- -- is the number's been disappointed is a revision to so we should have been more disappointed that we have -- in the past.

And you've seen that reflected in the market -- it the labor market is going to be challenging.

Russell were looking for very glacial improvement.

In employment this is going to be a long grind.

This better here than it is in -- certainly but that said it's going to be very slow pace of progress in the job market Steve I have to tell you such an optimistic way if delivering pessimists about yeah.

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