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Wilmington Trust Investment Advisors CIO Rex Macey on the economy and government policies’ impact on the markets and investors’ portfolios.
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High volatility uncertainty about Europe China the fiscal cliff here -- comment on and on this summer is likely to be a volatile one for the market but our next guest says there will be a lot of buying opportunities.
Joining us now is Rex -- chief investment officer for Wilmington Trust investment advisors -- thank you for being with us.
What you mentioned it doesn't seem to be a lot of calls for people to commit a lot of capital right now but you say.
There are opportunities.
I do especially when you look at your alternatives which -- cash and bonds I think you'll see some opportunities.
As the news gets darker and darker.
If you will rain clouds on the horizon we see the news of the fiscal cliff.
And we think that ultimately we're not gonna see the tax increases.
And the spending cuts that are.
If you will legislated to occur automatically.
We will avert those.
But as congress and Washington not to -- the weight the last minute.
They'll be a lot of hand wringing by the markets we thinks potentially down drafts and buying opportunities.
Yeah of course -- as you point out they're not gonna do that to December 31 we got a whole year are basically -- year of uncertainty ahead of us let's talk now about what's going on with earnings seasons.
You seem to have a contrarian view of how companies are going to report.
Well we we see what the reporting I think that the key here is the guidance the guidance is if you will.
I hate seeing negative -- we're seeing on downward revisions to earnings as we look farther out.
More than we'd like to see an earnings are ultimately what support stock prices so whereas in the past we've looked of their earnings season to support the market.
Through the gloomy economic news -- -- the support.
This quarter that we've seen historically so we're not expecting the pop in the market that line has seen.
In past quarters.
-- Rex you know the QE3 watch will probably begin again tomorrow on Wednesday when Ben Bernanke updates congress.
You know -- we have another very weak taco retail sales number what do you think the Fed will do with regard to QE3 and -- Shore up well first I think the message.
From the chairman will be to congress look we're doing our part.
Could you help -- a little could you give us a little fiscal stimulus.
The fiscal cliff again is approaching I wouldn't be surprised.
If he called on congress.
In a non political -- fed ask way to say it monetary policy can't do everything.
I'd be looking to the Fed to move if you actually saw jobs numbers.
Go negative.
I think it'll take more negative economic news for the Fed to really react.
They don't want us use up all of their ammunition I think they're running low.
Yeah we've been -- -- -- for awhile now.
And yeah with -- -- bad news you seem to think people should still be in the equities market.
Well I do because I think equities are reasonably priced.
At these levels you've got a decent earnings yield you can look forward if you look beyond the near term to.
To eventual blowing growing global economy.
Stocks arm a better long term investment.
And cash which is earning almost nothing treasury bonds which.
4% in -- 2% inflation world.
I think you need to own some stocks.
And I would also be looking at high yield corporate bonds that would be another place with less risk than stocks but still a reasonable positive.
Real return -- very good stuff -- suddenly sees the CIO of Wilmington Trust investment advisors -- thank you very much.
Think.
