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So investors -- here as you just heard from the coal likely taken aback by the weaker than expected print on fourth quarter gross domestic product economists were looking for continued expansion.
But a deep decline particularly in defense spending led to the first contraction in four years.
To Scott right now yeah.
Strategist for Wells Fargo advisors Scott Craig -- back here.
If markets have been ignoring a weak economic picture is this GDP report a wake up call.
Well Lori I think that you know the expectations were the consensus was 112 something like that so.
It was a weaker than expected certainly but it was weak expectations to begin went.
And I think really the market you know -- looking at things like consumer spending which was good that report they're looking at capital spending which was good wages were okay.
I -- I think the markets kind of looking at -- -- lining but clearly.
You know we're -- a very slow growth economy that's not going to change any time soon.
And -- you know.
Fortunately valuations are not stretch there they're not cheap but but they're somewhere in kind of kind of the grey -- so.
Those things are all helping the market -- a course of Federal Reserve right you're gonna tell us that hey we're gonna keep pumping money and this afternoon when they've when they announced.
Which obviously looking to me this wealth effect that the stock market has been enjoying with these historically low interest rates I want to zero in on the economy -- this GDP report because again it was.
Driven largely by a decline in government spending in defense spending and how -- the fourth quarter before the fiscal cliff.
Deal came into effect and now before sequestration could very likely also happened deeper defence cutting so.
If that lack of government spending which has been supporting economic growth up until looks like the fourth quarter.
Two consecutive quarters of negative GDP growth.
Recession so what's the likelihood that whatever you think of government spending the lack of it could mean an actual textbook recession.
We I mean if you look at the -- government spending contributes to growth you know -- we've gotta wean ourselves the economy has become addicted to government spending.
You take that acts that deficit government spending away and it's gonna hurt economic growth so you know technically you're right we have two quarters of of negative GDP and granted -- Minus zero point 1% is in the end of the world but technically that would be a recession.
I don't think we're going to see your recession -- -- British -- modest growth in the first I think we'll probably see.
Two and a half percent -- -- growth in 2013.
That's a little bit better than the 2% we expected in 2012 and actually -- ended up to be 2.2 so it was a little bit better than we expected and so 1012 at Fort Worth I don't think we're headed for recession.
Look at appreciate that I appreciate the detail on that Scott so let's talk about the advice you're giving your clients right now do you expect the -- to retrace all time highs here any time soon.
Are you all in our new long equities are you pulling back now what advice you -- -- once again to your investors.
We're all and we've we've but we're looking for pullbacks in 2012 got a couple of good ones.
You know we'd love to see a pullback here in 2013 because I think they're still a lot of retail investors with point eight cash on the sidelines.
I think you're starting to see a little bit of chasing here but just a little bit.
So I'd love to see a pullback had loved to see there be some Washington controversy over of these these spending cuts that are to -- again.
Some uncertainty over that that might push the market down a little bit but.
What we want our investors are we want them invested we want -- invested in in in.
Cyclically sensitive economically sensitive sectors like consumer discretionary.
We want them by technology.
Those types of things we don't want them to be defensive so -- enough.
He went to grow here retail I -- CL -- I'm right I'm times -- -- you're always such a great sport I learned at an associate instance got right thanks -- -- -- -- -- -- you guys.
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