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Minerd: Economy Not as Bad as We Think

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    Guggenheim Partners CIO Scott Minerd weighs in on the jobs numbers and the markets.

  • Duration 4:40
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Much discussion about the number of people working that calls the unemployment rate to drop below.

That 8% mark again 873000.

-- the number in that household survey.

And our next guest has been talking about this for months that the economy is not as weak issue might thanks Scott -- -- his chief financial officer.

I'm parked cars and joining me now from Santa Monica California Scott you called it but do you think that this is in some way a one off.

A date and look use that -- just a minute ago these numbers have a lot of volatility in them.

And you know they can come in any month all over the place.

But the bottom line is that the underlying trend which has been in place for about three years.

-- were adding about a 165000.

Private sector jobs every month.

Which is more than the number of private sector jobs that we were adding in the prior expansion before -- -- the crisis.

The problem of course is that the hole so deep and and the rate at which were getting out of the hole is very disappointing.

But.

You know given everything that's happening it's it's not all bad.

Do you think though that they not all bad with the good news is out there is already factored into the stock market and factored into the treasury market.

And bit bit and then said the next.

Move will be a reaction to potential negatives like the coming tax hikes and spending cuts than the year.

I.

I think were were getting more and more vulnerable to one of these other headlines coming in here.

You know we've still got a problem in Europe things in China kind of look worse by the day.

And then of course forgot the fiscal cliff in the United States and and the market is basically sort of stopped worrying about it.

The timing of these kinds of corrections is always difficult day in.

And given the momentum we have right now -- I think in the short run were vulnerable.

I do think that we will continue to probably see equity prices rise through the end of the year.

Which you know I I've said this on your show before the number one best indicator.

For Christmas sales as stock prices and with stock prices rising it looks like the fourth quarter will be pretty good.

But front page of the Wall Street Journal today to kind of go off a bit of a tangent here talks about the tens of billions -- On the its 200 billion dollars -- come out of stock funds the trade is gone into bonds is the stock market less I guess does -- have less of -- wealth effect today is people just aren't invested the way they were even a few years ago.

Well certainly the wealth effect of the stocks is very muted compared to the wealth effect of housing.

But when you look at like housing and the impact that's having on the wealth effect.

-- currently running year to date of the 13%.

Annual increase in home crisis.

That's going to translate into a lot of confidence in the consumers.

And you know one thing about that Wall Street Journal story this morning I think that people are sort of missing -- They're talking entirely about open end mutual funds they're not including in that ETFs.

And when you factor the growth of the -- into the equation it's not so clear.

That were actually seen people leaving equities really quickly Scott of.

All the different areas of the markets you look at though all of fixed and com and equities and then commodities.

What is the most dangerously overvalued here I would think it would be and -- and com.

Well treasury securities -- again -- and and US agency mortgage backed securities.

-- -- They make no sense at all these levels I mean you know that I've been Schwarz -- treasuries I got short little -- -- -- seems to be going my island yes why exactly.

And -- but I think that that that's gonna be a winning better over time you know the place where people lastly where should you go.

You know to get the best return with the lowest risk at this point in the place -- keep pointing to was gold.

You know the ratio of the coverage of gold relative to the total.

Money being created by the Federal Reserve is the lowest it's ever been on record in the history of the Fed.

And that relationship always -- launches over time and that tells us that gold has a lot of upside to go from here.

Unlike Kelly snuck Bennett and so we can't arguing about.

Not that I.

It's gotta go -- Normally get bank does that go buy some jewelry.

And I did not end of that I am not a -- -- in -- rains and all sorts of things I think it's got banking is that I don't great that they romantic.

With Asian art with Scott -- at Guggenheim.

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