Also in this playlist...
This transcript is automatically generated
Aiming to creep up to their highest levels ever incredibly the Dow close to its all time October high 141000.
164 point 53 -- -- got to put that out everybody but investors have got to prepare at this point for a lot of big economic data.
Every day this week we're gonna get on housing employment here to help us hash it all out and tells exactly what's the yeah -- Lonsky.
Moody's chief investment can't achieve economists and Dan one Trotsky.
The Dow was twenty points away at one point in the session Friday afternoon.
From 141000 were so close to that mark.
But a little -- resistance -- -- -- -- of that session more resistance today do you think that the bulls are a little bit scared.
About about the economy.
Yeah I I would think they are I mean consensus now is that we're due for a pull back anywhere from the next two to three to 5%.
And -- run up a little bit too far too fast so it's it you know certainly possible we take a breather here in fact.
We're looking for a correction and you know anywhere between now and you know the first two weeks of February.
I would also just like to point out -- while focusing on the Dow and the S&P the larger cap benchmarks.
Look at what the smaller cap indices have done the Russell 2000.
The S&P midcap 400 that the small cap 600.
These indices have broken out to all time secular -- -- a brand new highs that's very bullish in our opinion longer term.
Maybe it's still a little bit overheated short term but we like the fact that the small mid caps are actually leading the charge against all these other headlines that we're focusing.
It's still then you're looking at that short term February pullback you know you're saying -- up 5% so we can't it can't look at the shipment under John.
There's one big thing and you look at asked the jobs picture we're still sitting at seven point 8% unemployment in this country John we're being told by every economist -- -- right that and that's not gonna change to -- we have these markets take off when you have unemployment stubbornly high.
Yeah it's really hard to have consumer spending grow as rapidly.
As it did in previous recoveries.
When you have four million fewer jobs today that you did in January 2008.
You know we saw some evidence of that with.
The December report on pending home sales that fell by more than corporate that despite record low mortgage yields record levels -- portability.
The consumer remains very cautious.
At because of this still -- labor market that's understandable.
You know I -- I will say that that consumer discretionary is one of the areas they're cautioning against but Dan you're saying that -- -- -- -- go.
Everything else pretty much you like weather is cyclicals or financial or energy and in at this point you know you like those groups.
Be absolutely and any other guest -- -- -- good point you know the consumer it's not really searching the way they have done in the past.
And that's actually are points.
Specifically you'll end up actually a Renaissance and I worked well I think.
Well -- while -- but those are lagging indicators we think the Renaissance is coming around in industrial manufacturing lot of these early cyclicals materials.
Think once those things start to move.
You could start to see better economic data down the road.
Again we look at the tape first we chose to take as a leading indicator.
In front of the economy and I think that's what the tape is trying to tell us at this point.
You know John one of the things that we saw back down on it about 2004 here with the fat I mean at that point that's when they started at -- reserves and again.
A to raise raise but he did -- that market peak again going back to about October to about 2007 market peak.
There was that major lag there are we are we facing that again are we still that I -- you -- occur.
We've already seen that in the past -- provide go back to the 1990s.
The Fed began to hike interest rates in February of 1994.
The equity market didn't peak until March 2000.
So while the start of fed rate -- is likely to spark a sell off on the equity side.
They historical record strongly suggest.
That following that sell off there -- a lot of upside potential for equity valuations.
-- one more thing I wanna go today because you brought this up and I have to ask you this.
-- -- talking about the small -- the mid caps -- one of the things that we're saying under the regulatory environment the taxation environment Dan.
-- small businesses are on the fence when it comes to expansion.
Adding new machines.
Building new plants so can that rally really continue if that's what the small businessmen -- That's I mean that could be the fly in the ointment here is obviously any kind of fiscal missteps or any type of policy missteps.
At this point if you -- the trend of the tape.
They're not really factoring that in they're not really discounting that as a very high risk at least for 2013.
You know if if the market breaks down -- the tape breaks down and and then we're selling off to the tune of three to 5% and that starts to gain momentum.
Then we're gonna pull back the reins in our outlook for 2013.
And beyond but for now.
We're urging people not to be contrary -- in this -- but to rather be trend followers let the markets push us higher.
Let's raise our stops for risk management purposes but let's not miss this and right now it's clearly to -- -- pain trade the pain traders that the market wants to go higher.
Against consensus telling everybody that the economy's not doing as well that -- you know overdue a a major correction in the markets that's the danger.
Here they also did an investigator I can -- in -- the my name not commodities markets I mean I know -- like in 96000 change renowned -- but at the same time.
I mean you're gonna continue to have those push higher along with the market that's me would be able sign.
But yeah I mean one of the things we look for is is the hallmark of the next market cycle and I'm of the opinion that we're actually transition and market cycles hear from a deflationary bear market contraction which we went into the past decade or so.
Into the next major cycle which we think it's gonna be an inflationary expansion.
But we expect to see is commodities push modestly higher but will not outpaced returns in equities.
And right now that's exactly what's happening you have rates that -- -- press higher if commodities moving modestly higher but the big winner as equities and again we think that's a leading indicator.
BN Jun is telling me that we need four million jobs I.
I don't think I understand where those four million jobs John are supposed to come from.
I don't know you don't you were talking about small businesses all the -- small businessman right now is very much worried about the ultimate cost of Health Care Reform.
That gets introduced in 2014.
-- -- not going to be in the mood to step up spending -- hiring.
The more you know.
Moreover on the inflation front let's not lose sight of wages wages are the ultimate be -- as to whether or not.
Inflation will be one last thing -- -- wages are growing -- only 2%.
Not -- limited upside for inflation.
I now I know John Lonsky Dan what -- -- why have you both bond because it's it's confusing gentlemen thank you.
Filter by section