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New Constructs CEO David Trainer, Exencial Wealth Advisors CIO Tim Courtney and Trading Advantage President Larry Levin on how the gridlock in DC is i...
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-- south.
All right let's cover the markets in detailed outlook Larry Levin he's in the pits at the CME David trainer says we are headed for a market rally next year no matter what happens with a fiscal cliff -- -- according telling us.
What stocks he thinks are extremely undervalued.
Right now let's start with Larry this evening Larry.
We're glad -- that we we picked up after that 150 point wants to big turnaround I'm glad about that but let's face it looks like.
There is not going to be a Santa Claus rally this year right.
Now but certainly hasn't David that -- saw some pretty big downdraft.
Today and dot earlier in the -- and certainly that's not what traders really expect we get the last couple weeks of December -- of these.
Low volume rally I don't accidentally app doesn't have a high volume -- a high volume.
Drops in the market today was good example like these that we didn't.
-- -- quite a bit obstacles.
You know those points in the -- so to -- have been made in the end it traders look at that they see this markets keep making lower lows and that certainly makes them wanna sell into the market.
Five Dick and David I wanna get your thoughts you know this might see at what's going on in and around the beltway the gridlock that -- days.
You're still a believer in this market you believe and then markets forging ahead tell -- -- -- so optimistic considering this wings and we signed just in today's trading day alone.
I think most of the by -- who might buy mobile vents are behind us I think the fiscal cliff is more media event that it is a true economic issue.
I think Europe's behind us unemployment is finding its footing.
The housing market is finding its footing so I think generally we've got clear sailing for 2013.
I don't think the market's gonna skyrocket.
I just don't -- -- to the wild swings we've seen the last couple years David let me challenge and that a little bit and Tim will get -- just -- second but.
You say to most of the bad news is behind us but what if we don't have a deal and that's still a possibility bought the fiscal cliff.
And as most economists thinks we going to a recession -- mean that a recession is not priced in this market is it.
I think so I think we're gonna have really slow growing David the last I don't -- -- -- last that we had a recession in the Dow went -- out of 6000.
I look I think that I don't think there's really many things that they can do in congress to avoid a very slow growth economy.
It's not whatever they do it's not gonna -- economy to grow like crazy so I don't think the market is pricing in any kind of major reversal on economic growth.
Economists around the world for a long time -- said.
We can hope for 2% arousal and as David let me just be precise here -- because it sounds like -- contradict -- now you're you're saying specifically that if we -- -- recession.
A recession a full blown recession is not.
Priced into this market correct.
I think -- you're right I mean I think to be specific I don't really believe that we will ever go over the fiscal cliff into a full blown recession.
I think that's pretty much more.
Political posturing in in in media hyperbole.
So I don't see that -- actual practical possibility they'll figure something out they won't send us over the cliff into recession oblivion.
-- I wanna bring you in here are you see any upside potential in the markets a lot of people out there -- -- saying that this is pricing and we're just talking about it.
But but I wonder if there is any possibility for gains I mean we're seeing this temporarily when congress could -- it gives us an indication it's gonna come back we get a -- but anything -- I'm not that we can look forward to over the next few days.
Well I think over the next few days you know I would expect it to be probably volatile like it was today.
A lot of people doing some last minute repositioning of their portfolios for tax reasons and otherwise and I think that's gonna continue.
But.
I agree with what was said prior there's a lot of bad news priced in the markets.
And up prices are prices are low -- I'd be concerned if if the markets for priced optimistically.
As though we were growing faster and corporates -- profits -- growing faster.
But the market is priced pessimistic -- not only in the US but especially over in Europe so.
When the markets -- price low.
Future expected return should be higher and we would look for 2013 to continue to be fairly good for markets -- intimidate you you mentioned quite -- -- you make the most about a money went when good didn't stocks.
Good companies are priced very low.
As you say overseas in in particularly in Europe you've never seen prices is slow on some talk particular at real estate how would you.
Buy into that market.
Yes there aren't that many international reits available and so the way that we would purchase that would be in a very well diversified index fund.
That owns about a 150 -- 200 of the reits available worldwide.
Now what you're getting you're getting access to to all the reits can offer -- yielding close to 6% and dividend pass through let's see did -- way yet lead producers put up the ticker DF ITX go ahead -- Sure and so -- you get a very good yields.
Because they're trading at relatively low prices plus if inflation is high.
You know that the properties themselves willing trees so we think that said international -- is priced very well for -- I'll Larry -- bring you in here are some key and numbers coming into daily traded below 14100 on the S and piano that something that you watch closely any other technical.
And detectable landmarks if you -- that we need to be paying attention to that could take in buyers or sellers as we go over the next few days.
Left fourteen -- gotta be the number one thing the one thing to think about it we got below it but that we're gonna settle well bought followers and about fourteen.
Fifteen about fifteen points -- fifteen handles.
-- -- left 14100 level so it's really settlements of the traders behind me that I watched.
On a daily basis of the markets settle below 14100 I think you might see obviously a much weaker -- Trigger close because obviously -- Could be a lot lower but Yeltsin's a lot of people selling net thinking that the market will continue on tomorrow having this bounce today really kind of gave traders a little bit -- -- obviously -- decent lot of buying.
14100 to where we are right now at 1415 to watch that 14100 tomorrow -- it comes in play an aunt and especially next week so.
Now David you are not a technical trader at all you always look for value in companies so.
And McDonald's is one of the companies that you -- what is it about McDonald's in which you find so much value right act.
McDonald's has been one of the best run companies in the world of the last 1015 years.
We've seen the returns on invested capital their margins -- profits go up significantly all the while taking the best shot.
That -- at Starbucks and Burger King can throw out an all they -- become more profitable.
It's me Wal-Mart -- UP -- mean sergeant McDonald's people overlook how strong of the merchandising.
The distribution the advantages they have in their business and when the stock is priced -- -- the profits -- -- permanently declined by almost 20%.
I see great value great company trading at a big discount united has come down we're looking at a three year chart now looks up -- -- one year chart definitely shows it.
Coming down quite a bit Tim -- David trainer thank you so much guys appreciate it Larry we're gonna come back in a couple of minutes.
