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Stifel Nicolaus Portfolio Manager Chad Morganlander on the outlook for the markets in the year ahead.
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-- But 2012 -- a massive year for the markets -- -- guess would be posting its largest gain of three years will it continue.
What's the best way to play it.
Here with the first on Fox Business look at the firm's 2013 outlook is Chad Morgan -- portfolio manager at Stiefel Nicholas thanks -- -- none thank you for your first Chad.
-- right so still.
Break it down for us here what does 2013.
Like what's your outlook.
-- it's gonna look similar to 2012 -- United States.
Okay.
For the first quarter or two and you should see you re acceleration.
In 2000 watch our team -- trying to capital spending in the United States should improve.
Household credit growth which what I really mean by saying that is at home prices are gonna start getting a lift.
Home sales.
Which will be a self sustaining recovery something that you haven't seen.
For several years but after tax incomes going down is -- not well you will have historically they -- -- consumer has the ability to readjust somewhat.
But it's not a death blow to the consumer.
From that perspective.
So there's still enough left over at the end of -- at the end of the week to -- -- shop right this is it enough to get -- go with consumer credit -- you're gonna start to see.
Fans something that you haven't seen since 2007.
ECB unique thing that happened with the recession the Great Recession as they call it.
Is that consumer credit started to actually go down.
Something you haven't seen since the Great Depression so what we're calling for 2013.
But perhaps more in 2014.
Is that consumer credit will start to expand -- house household credit so you'll see more on new home sales and one.
A -- you know and boosting this recovery is -- central banks are doing not just here in the US but around the world we're -- -- -- chart it shows.
Quantitative easing here in the US and also by the ECK.
Am just concerned right now.
What does this mean for inhalation.
What does this mean for the dollar well how does this concern you all of this massive stimulus and money pump and well.
It -- -- it's going to have an influence on the credit markets and it had.
-- the Federal Reserve with all of their monetization and their expansion their balance sheet.
Like the ECB has kept the credit markets and and we're relief in fashions of the decks for instance the volatility that's is that a low.
Now what you're really saying is will -- be hyper inflation will of the inflation that or anything yeah I can -- will write you -- as my Harvard and you will.
I'm not sure if you going to see.
A massive its -- spiking in that spike in inflation.
Until the economy global economy starts to re accelerate.
-- should keep in mind that the in the United States the Federal Reserve's balance she's gone from three trillion to four trailing.
That is roughly about fifty trillion dollars of global debt that's US based -- what I -- a US -- I mean.
Dollar -- dollar backed and so it's not as if we're moving money supply up -- 30%.
It's it is built some things to keep and I.
Now unemployment is seven point 8%.
Precisely the level it was at four years ago course it's gone up and come down a bit but.
Are -- looking forward that to become the new normal.
I don't believe in the new normal here is if you have a re acceleration in the US economy over 3% to three and a half percent and that whole term new normal -- -- -- we're nowhere near -- you're not blow yet to vote if you start -- UT 2% and 3% is enormous numbers of what it means for the economy well it is and that we're anticipating that in the later half of 2013.
You can start teaching and half 3% perhaps and 2014.
Perhaps it's just when you think is okay we've lost and how much were usually I mean it again -- 1980s is brought up as example because that was a terrible recession to.
We were coming back at quarterly growth rates once we get out of recession of of 678%.
We -- anything near that so we've got a really jumping ahead to get back to what we should where we should be and where they -- released.
Ages of a read -- re acceleration you've had this debt he -- the debt paid down this debt deflationary spiral that we went into.
The Federal Reserve jumped in -- had this huge fiscal thrust from the US government right.
American Recovery Act and -- the next stage of this is that the consumer in the private sector have to.
Kick up but the question that you really ask was unemployment will it start to go lower and I believe that you will start to see -- gradual decrease in on play in the unemployment rate and could.
It's restoring investor you have two scenarios where you can make money an aggressive strategy and a conservative one can you take us through -- sure absolutely.
On the aggressive growth strategy someone that does not need a fixed income portfolio when she consider having some money and emerging markets.
Out also.
Like to previous guest may have mentioned gold also is perhaps the good nice inflation hedge if you do you start to see re acceleration of inflation.
And also large cap.
Large cap growth as well as large cap value should always who should be overweight and one sport and more conservative would be more conservative would be roughly about 35.
In equities and gold.
With 65%.
In US based debt either be corporate debt high yield as well as.
Government.
Debt.
We want to keep you maturities very low meaning.
You duration -- you maturity should be about four and a -- five you know the interesting thing is that in the aggressive portfolio we got to run but in the aggressive portfolio you have gold.
12% of your holding his goal.
That's in the aggressive things that we got to leave it that Chad great to see congratulations on this report much better in the IMF forget got a -- All you need to Stiefel Nicholas thanks Jack thank you me.
