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Jamie Cox, Harris Financial Group managing partner, and Brien O’Brien, Advisory Research Inc., CEO, weigh in on what moved the markets today.
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Let's turn to our market panel joining us now is Jamie -- -- -- is Harris financial group managing partner at Bryan O'Brien.
Advisory research CEO thank you gentlemen good to see you both -- first do you the Fed a lot of people haven't we -- -- to the Dallas fed president but.
A lot of traders were focusing on the Fed repo market tell us about why that was significant may have played into today's rally.
Well we had Philly Fed -- from a data came out at 10 o'clock about fifteen minutes ahead of that.
We -- repo agreements -- across 200 million dollars come across adding liquidity to the market.
-- I think that that promoted.
You know a lot of -- strike -- weakened the dollar which you know sort of set off this you know does that -- -- far off in the market where you've had.
You know equities you know become meet you -- have this but the dollar gets weaker equities go up and and that's what sort of happened in the in the middle part of the day.
And I think that that really promoted what we saw earlier in the day because if you look at what happened when the Philly Fed data came out.
That was really bad news -- was a ten point spread over expectations yet the Russell to -- -- an index that even budget in fact they went up.
So I think that the repo you know and in injection of liquidity in the market actually had an impact on stabilizing the market into that bad number wolf.
Brian what do you see I mean I first that I thought was great first time jobless claims falling and that certainly is -- number you want to see come down that was a nice move plus pick -- the housing numbers and that show a lot of optimism my I would say and then suddenly we we do have a very solid market was some participation correct.
Yep that jobless -- is a very good number it's cassette and -- up for a nice number going into year end for new jobs created going at the end of the month.
So we're looking forward things to participate relatively well here.
Well Brian one question I'm gonna put it to you the same question put to Richard Fisher now why is -- that the market's doing so well right now when the economy is still -- granted we had a good jobs number.
At least it was it was a big improvement over over what we thought would be but the economy is still stuck below 2% growth.
Do you think it's possible for the market to continue chugging ahead at the speed it has been with the market at a below 2% level.
Right it'll be difficult for the market to continue its pace of the last several weeks for the rest of the year.
But we look for stocks to be significantly higher going into year -- additionally what you've got going on -- corporations are being very well run right now.
Balance sheets are very strong corporate management there is is running their companies very well.
And you're seeing good earnings and good numbers coming out and that's been reflected in the market.
The other thing that's important here too is investors need to put money to work.
And the opportunities that they have are most attractive in the domestic stock market right.
Now but Jamie in -- what it would he mentioned financials when Brian talks about that I'll let them think of this.
Financial companies the big names have kept their costs down that's not exactly commensurate with making a ton of money but yet you like financials among.
Other names out there at least sectors let's talk about where you would show us the money for your clients and our viewers.
Well in the financial space I think you need to be focused on regional banks they don't have the you know the stigma of the too big to fail problem.
You know a bank you know banks in -- -- sector suntrust AT&T we talked about it last Friday.
I think that those banks actually show or have the the -- market related to participate -- housing it's better.
They're sort of positioned better I believe for recovery they have dividend.
Yields which -- you know reasonable at this point they're not hampered by some of their legacy assets affected and the -- we actually saw net interest margin actually go up.
And I think that that is it's unusual.
It has faced if you look at all the major banks JPMorgan and others that interest margin was a big drag on their earnings in this and and law last year.
So and -- it with the regional bank should find that it those particular organizations are able to manage that net interest margin because they're not overwhelmed with cash.
Like some of these other banks or.
I don't -- what -- -- Jimmy -- also don't like what what about the bigger banks this cities in this and the Bank of America's BankAmerica had had a nice run up but today was down.
When we got into the weeds about exactly how much it it -- how many bad debts it had to absorb from Fannie and Freddie Citi bank.
Too big to fail still and Richard Fisher was talking about that is it time to abandon them for the smaller regional banks.
Well -- full disclosure -- I'll bank America personally but just.
Just to say I think -- than most of people that that would would argue that they would rue the day that -- ever absorb countrywide because it's been that.
The albatross around its neck for the better yeah five years or they were still -- out of -- I mean where we got we may have gotten you know -- the Fannie Freddie thing with the settlement but -- not pass the countrywide.
Just yet.
And I think that what you do you can get -- that -- clearer skies but.
The financials are are pure play against an improving economy so I think that that is it it's a pro cyclical type.
You know investment strategy look at industrials financials technology and -- cereals I think that's what we always.
If the Bryant on on -- -- his financial name of that as American Express you also like a Leucadia has another kick.
But I guess not eleven axes as a Dow component a lot of people -- at that looked to know your perspective right now.
-- amex's they put out a good number today and it again here's another situation where management is running the business very well.
Additionally with -- they've got the right kind of client didn't hear right now they've got that upper Echelon client those people pay their bills they pay him on time.
And you've also got the benefit with Amex of they're getting exposure into the emerging markets.
One of the keys -- been successful for big businesses right now.
-- to make sure you have exposure into these emerging markets that's where real growth is happening and that's a good offset to kind of that soft anemic.
2% growth rate we're experiencing here in the US so that's one of the things you need to look for in these market right now.
And finally Jamie information technology you're big on eBay why.
Well I think you know eBay if you look -- what -- used to be ten years ago it was about you know that's over an auction type situation.
Now you look at their marketplace it's all of -- fixed price that they completely altered the landscape of what it used to be used to be this auction site now it's Cordoba.
It's horribly I think the -- CEO is is called the -- -- outlet mall.
It's a -- alike that concept but it -- again I also like the mobile strategy with PayPal.
-- mean discover and others -- are using PayPal for their person pay technology.
And I think that that really promotes an unbelievable opportunity for a couple like eBay.
To gather of this mobile payments space which is growing leaps and balance there we see it was square and other so I think today eBay does this sort of PayPal been around long enough the people trust it and I think that matters when you're talking about transaction volume and transactions between two parties.
And I think they said in a very good position.
In order to take advantage of that mobile space as it continues to become sort of commonplace.
And and grows because you can look at their mobile they've really they really understand it.
And I think that there's there's this quarter indicates that mobile is sort of big is going to be a growing part of their revenue in the future -- and that.
Look at their earnings -- they're the records so that's that's my view money back.
Jamie Brian thank you so much for giving us your favorite picks right now we appreciate it thanks guys appreciate it.
