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Piper Jaffray Technical Market Strategist Craig Johnson and Granite Investment Advisors CIO Scott Schermerhorn on where investors can find opportuniti...
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Get back to the markets the Dow may have posted its best month since October of 2011 in June -- okay but on the other side it also closed out with its first quarterly loss in three quarters.
Which is the telling the story that really the real story -- first -- my kids I'm -- -- -- chief investment officer granite investment advisors.
And Craig Johnson technical market strategist at Piper Jaffray Scott.
-- -- will begin with you you can look at the data anyway you want but let's start with -- ISM number which showed that manufacturing slowed down in fact is contracting at least for the month of June.
Does that not make you temper your opinion a little bit more on being bullish.
Well as against him -- different view over at 101 thing our channel checks are telling us.
It seems that what happened in this nice batch of whether we have the first quarter you just -- some demand forward.
We've been talking -- a bunch of some of our retailers they'll tell us the first their first quarter was exceptionally strong.
Then slow down the beginning of -- second quarter and -- start to see some of it come back so I think we might have a weather pattern here that people aren't properly taking into consideration there's.
Always that risk isn't their -- yet you remain pretty bearish and I'm I'm interested to know.
Why do you feel that the numbers that we saw over the past month are not something to -- or sink your teeth into and are you by not doing that than missing that opportunity of some pretty significant moves so what's -- what we saw Friday.
You know -- our work give a sell signals in the mid April timeframe we took advantage of those sell signals.
We raise cash at that point in time at this juncture our signals that we look at of the market the number of groups that are hitting new highs.
The number of groups above their forty week moving average they have only modestly begun to expand.
And at this point in time we're still below a declining.
We still below the downtrend resistance line off of the April highs at this juncture as a technician we can conclude this is anything more than a relief rally at this time.
-- -- accident this -- OK so let's remind people Craig is a technician he looks at numbers he judges but.
We know the market is also living breathing emotional creature and -- -- -- looking at here's a piece of data to seven out of ten S&P sectors.
Has had negative revisions.
End and that those numbers and those technicals they don't scare you off.
Now -- they really don't -- -- you have year earlier commentator when he got into the market typically sells a fifteen times earnings.
We're now with thirteen times so let's say estimates are too high.
They come down a little bit maybe get the market to fourteen times earnings by no means it's expensive.
The other let's say the reality is we closed the quarter year to date up -- almost 8% on the -- 3% the S&P a it's a lot better than treasury bills did for you -- money markets which are no money whatsoever.
But we're looking at is attractive valuation companies and with balance sheets and much better shape than -- -- And more importantly what's happening is companies are starting to return more money to shareholders.
By raising dividends raising buybacks and his -- history will tell you that's always been a good time for investors.
It's somewhat counter intuitive but when -- spend money it's often not your best interest is invest but when they return money deal would always.
Crank it hasn't paid off to be fearful okay because Scott just makes a very important point.
That all take 8% drop take a dividend of 7% -- whatever dividend Pfizer's -- Over one point 56 intra day for the ten year and I'm -- -- my goodness unless it got some better ideas.
What are you putting the money and as far as your clients are concerned what are you recommending crack.
You know -- that's interesting because when I go -- I see clients and a continued to have conversations with clients directly basis.
There's still more money going into fixed income funds and there is going into equity funds.
I think at this point time around the globe.
So what we've been saying to clients says yes there is a bit of a relief rally that has begun to unfold.
But at this point time when can I conclude its anything more than a relief rally so I've been saying to clients.
We think there's still downside risks in this market down toward 118012100.
Or over the coming summer months and we've been finding some pockets of strength where such as housing.
Such as housing housing in our opinion is clearly bottomed.
And we believe that we have broken the downtrend resistance line off the 2005 highs.
We've been buying things like Lennar we've been buying things like DH Horton.
And the some of those kind of names also point out that we're seeing some pretty good -- to strengthen the financial sector.
Again -- -- -- -- underpinnings to the market and we don't think we're gonna see a retest back to the lows have you seen in march of 2009.
But on the other hand in the near term.
With earnings coming down as Scott did point out.
We don't think it's gonna be a very exciting environments -- a whole lot of multiple expansion as earning revisions are -- doubt it doesn't make sense with 6% growth.
You -- always surprised David ever think financials at the one thing that might be really frightening to a bear but I guess not and finally let's just quickly get Scott's areas.
Where he would say put money in -- now for real opportunity.
I think the biggest -- in this country right now as a whole natural gas sectoral -- And you know you we all know what said -- huge.
Discount to to oil overall.
And what's happening you start to see more more companies more and more -- the -- utility company fleet sales for -- use.
They're all sort of realizes discrepancy people moving towards it so it's a very cheap commodity.
It's a US based commodity so you really -- -- to worry so much about what happens in emerging markets what what happens in Europe.
And I just think if anything I think it's going to be give us a -- competitive advantages a country as far as and some of the manufactured -- -- uses a feed stock.
Craig Johnson Scotch on the horn great to have you both talking about your perspectives and and that people get to decide for themselves thanks would state your case -- -- -- -- -- -- -- -- --
