You're watching...
Russell Investments chief investment strategist Erik Ristuben argues consumer spending will continue and drive equities.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- -- stocks are reaching highs not seen since before the recession so is this the result of the feds squeeze and investors out of those safe havens joining us now -- -- Chief investment strategist with Russell investments.
You know it's it's just saying -- markets -- fire bulls out in full force in yet he got consumer sentiment pretty weak energy prices on the rise -- affecting data not all that.
How do we explain this.
Well I think first of all we we we expect the economy to continue to expand in the United States.
We think they're still will be a global economic growth pattern.
With the emerging markets leading the pack Europe basically being a recession if you think about the economy -- chugging along I think what we've seen in consumer spending and consumerism.
Throughout the course of this recovery is that the consumers.
Are weakened but they're still spending we expect that trend to continue and we think it'll drive helped drive equity.
Prices up.
But you know Eric yes and pay back close to all time highs the vick's at a low not seen since you know 2007.
There -- those analysts who say all of this.
Points to a pullback in the market do you think that's true but then could that be the beginning of a new bull market.
Well yet where were long term investment shop and and we're really looking at kind of where we think the sources about you are.
We invest to either build or maintain wealth that's done through positive real returns.
When you look at kind of cash fixed in equity equities are really of the one of the free asset classes that -- off for the opportunity for positive real returns this year.
We think that's what's giving price support and why we're seeing flows into the marketplace and we think that's gonna continue.
For the year we may seem to some ups and downs based on you headlines coming out -- -- Europe -- Washington.
But we wouldn't tell our clients look through that volatility.
To what we think is going to be a long term good year for equities.
-- -- again when we've heard before right you can't fight the trend in the trend seems to be -- -- gotta go with it.
So that being said you really like consumer discretionary how come.
Not well because that would be again what I just talked about.
We're seeing.
Consumers as the economy continues recovery and expand consumers are continuing to spend money our orders overweight isn't a diversified media.
Which you can basically think cable companies.
Comcast Time Warner Viacom.
Like the if the consumer has money in the pocket they're going to spend it and and it's turns out they like watching television.
We think that's a good long term play.
But you know -- we've first -- consumer sentiment deteriorated anything and then the expiration of the payroll tax cut.
I certainly taken you know money out of people's pockets.
Combine that with unemployment and the other types of jobs that are out there are perhaps not the best paying I mean would that not signifying that the consumer still is.
In a difficult situation and how's that reflected in the market.
Well yeah they are -- difficult situation we're not expecting you know.
We're incredibly robust global -- spending just simply take a continuation of what we've seen over the last four years more spending.
Unemployment is bad but it's gotten significantly better.
Holding cash gives -- affect -- -- zero rated return so the consume now verses saving cash terms is probably gonna lean towards a little more towards consumption.
Just enough on the margin to keep those consumption rates and the consumers engage in the spending in of the market.
Enough to power stocks -- not dramatically throughout the course the year but to a very solid year in terms -- returns.
Yeah I think that's -- what everybody thought was in London Christmas and it's sort of did it.
But we'll see Eric presented with Russell investments thank you very much security as you write them fight the trend it's.
-- -- -- -- -- -- -- --
