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A panel John Manley is Wells Fargo advantage funds chief equity strategist.
Scott -- street one financial president thank you both for being here is Scott let me begin with -- -- -- from what I can tell you cautiously optimistic.
Not much to say cautiously pessimistic really -- -- get into your notes so as we kick -- the fourth quarter earnings Scott what are you looking for we have from Alcoa.
Not bad but what do you think the season brings.
Yeah I think I think it's going to be a lot like we saw with -- you have some companies that are meeting estimates.
Maybe a little bit -- -- -- what we had last quarter you have people meeting in the numbers for entered -- missing on revenue.
Revenues big -- for us we don't think the fourth quarter is great we're looking at diminished numbers that companies need to be.
It may end up you know some companies may and the beating earnings but we think all in all it's -- be -- slow bleed down for the next three months and we expect more downside than upside.
Well and that's on the -- -- here because you are more bullish obviously than sky and this is Scott say you know that -- cautiously pessimistic tone.
A lot of hedge funds and money managers took that approach in 2012 and it didn't work out for them because they missed the rally John do you think this is it time to jump into the market.
Don't fight that -- -- the Federal Reserve is sort of decided that.
They want asset prices to stable other providing liquidity -- the system.
And pushing the market down an awful lot when the Fed is being -- colleagues like trying to push beach ball under water it's really hard -- down on them to -- appoints Scott okay let me ask you.
You know particularly go for individual stocks are still like the ETFs why -- what ETFs in particular deal like.
Both of -- it's -- play for the next three months ensued did in the late spring we think it's still going to be a tough time for the market were expecting market to roll over another five or 6% from here.
-- the slow bleed not some mega event -- news cycle that that brings it down before we see a runoff for the rest of the year.
So rather than looking did to pick the one stock that's gonna outperform we like the TS relate the Biotech sector which we think from the tip from investment standpoint should always be.
As an ETF for mutual -- to diversify your basket.
Technology old school technology and financials we still like and then you know your cash aspect -- can't -- -- wanted to money markets your high dividends.
Blue chip stocks anymore -- -- high yield ETFs like each wild it.
Now we got a great contrast of opinions between -- -- because -- like you're saying by the financial -- when he thirteen John.
You're bullish on the broader market -- -- avoid financials that perform so well last year.
Well I think underweight -- -- so it's hard due to you know when the Fed is being accommodative again it probably helps the financials more than anyone else.
I'm more more consumer regulatory risk than anything else more concern about -- -- legislative gridlock in Washington but they won't be a regulatory about gridlock and I think that's gonna make it tougher for the financials.
I'm not negative bottom I like other things more I'm talking to extend -- what deal like mall.
Well I think I think health -- still very good story it's not as cheap as he used to but I think healthcare is percent of GDP is gonna start to -- who has been flat for two or three years that's very rare.
I also like big technology I'm Scott amount I think technology companies selling to other companies -- do very very well over the next two or three years.
And if Europe is near its -- is I think it might be.
I think that can be a plus and finally I think it's too soon to buy commodities but we'll start to nibble on the big energy stocks -- -- big -- and do very well I think.
There's still a great -- building -- natural gas the next few years.
So -- -- gotta pick on you just a little bit here I mean you're saying have 25% of your portfolio.
And catch at least to start the year.
Again a lot of folks that did that last year they got cotton in missed the rally -- that's a good idea.
But that's -- saying in 1990 people who did this and trying to correlated to today investors last year.
This -- this theory haven't been -- completely different legislative and economic cycle going on right now.
-- in this 25 -- -- cash this is for the next three or four months.
I just think that this is going to be the tough times we get passed -- the the debt ceiling and all the earnings reports coming out the fourth quarter that's a word.
Cautiously pessimistic and we think people should should just be -- more conservative.
But we expected to -- big rally coming in for the end of the year from say.
June through December may through December we think that the market's gone straight -- They give us they give us an estimate say on the ballots in Q what he watched.
There at Citi SMP you know we we could see going -- about thirteen 26 from here before closing the year around 1530.
Wow that's -- that is big John let me ask you we've seen so much money.
Flow out of the mutual funds and into bombs -- just outlooks all but equities when do you see reverse -- that trend you're a little more bullish.
-- so when do you think we'll see that pivot point when we -- -- money flow back the other way.
Money is going in their -- stock market's been going up so -- I don't I don't think it's measuring everything that's going into the stock market I think -- be actual phone numbers can be somewhat deceptive sometimes.
I think the market needs to show some positive performance for the fund numbers start to look better but I think I don't think it necessarily -- and certainly did in 2000.
Well Donna what I ask you about those commodities that you just mentioned looking at gold prices there we've seen some interesting movement there they've been underperforming stocks.
To start off the year -- I spoke to George -- over RBC today he basically says that he believes we're gonna return back to the basics the commodities markets gonna focus than the weak dollar which tends to boosts commodities.
It's gonna go back to focusing on the low interest rate environment and we're gonna see -- pop -- these commodities again is that your -- Well I gold -- -- I think don't think of gold as a commodity think of this currency I think that's where is this the world's fourth or fifth currency.
And gaining gonna gain more popularity to make every wants to be deflate their currency.
The other money so that we need a stronger economy could be a second half -- could be somewhere.
Out next year.
I meet on the equity strategist so I don't really claimed to be an expert on this but I think.
There is value there I think I'll start with the well I think I think gold is different the other commodities will come along with -- later on.
You know Scott there's been this race to debase across the world really is -- going on for some time be -- gold has not really responded in the right that you think it would.
What what what what do you what's your thought on gold where it goes from here.
They have done.
We're really not that interested in gold right now I think it's it's -- pretty much flat line from here and it's just going to be some in the -- -- there is the year along with with any political moves so.
That there would -- -- they were cautiously pessimistic on the market in general.
And we peace begin seeing gold just flat lining from here you'll you'll get some people coming in and buying -- on news events are on expectations of inflation.
But I really don't I really think the -- play is is over I'm not looking for a huge sell off but I think it's going to be more flat line -- for 12% range from here.
And -- Don really Scott freeze thank you could debate there and I think -- good.