You're watching...
Security Ballew CIO T. Doug Dale argues the markets will remain in neutral for the next two years even if a fiscal cliff deal is reached.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Five days left until we dive over the fiscal cliff is there any challenge that Washington will settle on a deal well my next guest says.
Deal or No Deal the markets will be stuck in neutral for the next two years.
The dip joining me now is C does -- chief investment officer at security about -- -- he's joining us by phone.
-- okay two years you say we're gonna be bumbling along whether.
We -- a deal -- not what makes you say that.
Well actually -- Al.
Really several things global growth is slowing debt levels and developed economies are high -- -- be lever.
Starting and the exterior will be in the government sectors.
Tax rates are growing up and so when you combine those things together -- just makes or.
Potential for recessionary conditions and we've had markets that have.
Double -- broke the world the last pretty happy years -- on orbit pick breeder not been.
Interest thing value say the S&P won't get -- September highs of around 147 people.
For the next two years you truly believe that.
I do let me just got back so what the markets do when recessionary conditions.
-- -- president and market and the third down not up.
So when you look at beverage late -- recession when ego and a wide Becton the last around on month on average.
Markets tend to decline from -- blow over -- a -- period it was just tells me that -- September and October represented -- high as.
We're really looking at some part of when he fourteen always -- the -- -- end probably -- -- -- but all we could exceed those odds.
And you see GDP dropping by about 2%.
You know the latest housing numbers they continue to be.
While not spectacular was certainly heading in the right direction that we do get a daily in Washington.
I seems to me a little more optimistic than your outlook.
Well keep in mind housing and stop marketer to -- at sick last.
Counting -- clearly.
On satellite as it bought element thanks a low interest rates -- think it will continue to recover.
But remember what housing -- does not an investment bit closer to a consumption not on a different than buying a car it is -- -- As part of our economy and as -- part of our overall growth.
Housing and stocks are clearly two different asset classes so what they think it.
Housing could be behind -- even do well meaning LG's stock market environment no different than the 2000 to two else to reach out.
That's interesting -- because really if housing is doing better in the prices come up consumers and homeowners feel bad.
They spend war perhaps businesses will stop unleashing some cash and now hi -- -- It's kind of a snowball effect isn't it.
Well that there will be some tail winds like -- that you gotta keep in mind that headwinds coming from.
Just some of the things that the Republicans and the Democrats agree all the fiscal weapons -- GDP growth.
Substantially and when you think about the fact that the government's been spending 7% blood hard DDT -- -- that basis being right here.
The last four years -- talking about.
You know north Eritrean dollars -- economic impact if they ever side of the current balancing the budget one.
You say stay away from equities in this environment but you like -- what in particular.
Well I think the long term treasuries is that deflation head delighted investment grade corporates relative to equities or -- principles to -- -- coupons were like emerging market bonds.
For some holding -- and move emerging market equities.
And a key commodity not saying stay completely away from equities I'm just suggesting -- of the weight Dirk all the -- exposure relative.
What about gold have been talking about Goldman they showed you like don't you like the mining stocks as opposed to.
You know the gold ETF.
I do like the mining stocks.
The mining stock today are trading at thirty year lose their price Israel to gold now.
So valuations are compelling -- -- -- owned some equities I think it's appropriate owns some technical market.
Very good lots of information thank you so much stayed -- -- security -- -- chief investment officer joining us by phone this afternoon and thank you so much.
But you are.
