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Payden & Rygel Senior Economist Jeff Cleveland and Strategic Wealth Partners President Mark Tepper on the economy’s outlook and its impact on in...
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Futures close let's bring in David -- Smart -- -- and Jeff -- -- there -- a lot of action -- -- -- -- down there Jeff let me go to you first -- we're we're talking to your little bit about the Fed earlier today its influence on the market a lot of people thinking.
That unemployment number was just bad enough so that may keep the Fed in the action is it fair to say Jeff that the Fed's bond buying right now.
Is more about keeping the stock market up and getting unemployment down and if so is -- is there any danger to -- Well I don't think it's necessarily intended.
TT equity markets up but.
Both the equity markets and -- the fixed income markets are really focusing on that unemployment rate number.
And the fact that it tells -- -- that I 'cause of what the Fed yeah I don't agree spots.
Right so I ended -- a number tells you this morning David.
Seven point 9% unemployment is a far cry away from 7% -- and we think it's when you get closer to 7%.
That -- -- -- fed you know eases their foot off the gas pedal.
If you well.
And -- a 157000.
Jobs every month is good.
It's not a recession.
But it's probably not gonna get as close to that 7%.
In the foreseeable future mark.
-- seemed to need to be a type is as we have known each other for a couple of years through the television -- But but how do you feel about the economy as it -- through the investments that you're making for your clients.
We feel that the you know it's been proven by Reinhart -- broke off that once your debt to GDP ratio crosses over 90% economic growth is gonna slow by 1% a year and he can get back below that 90% number.
So -- that level right now we saw one and a half percent GDP growth last year we would expect you know may -- 2% GDP growth this year.
And you know let's not forget that we are entering the fifth year of global markets sell you know at some point we are gonna have to and our recession we just saw the first -- GDP reading since 2009 this year -- markets completely shrugged it off.
This year recession.
-- and I think maybe towards the end of this year.
We may see the -- in the economy start to grow you know.
She's been a strictly due to the fact that you know it really everyone across the board is paying an additional 2% tax this year due to the -- That the payroll tax coming back them.
So we do think that that is gonna hurt the consumer towards the end of the year and consumption does make up 71% of our economic growth are well Jeff who we it's a guessing game as to whether we're gonna go -- a recession or not but it's no -- about your your present a recession.
-- you think it's gonna stay there -- for all of 2013.
That's pretty bearish why do you think so.
Well I think the market is happy right now because the market looks -- -- Does is the euro's stronger relative to the dollar that's it a good sign of the market's looking for.
And our ten year Spanish government bond yields lower than -- than they -- -- two months ago or three months ago or six months -- those those two conditions hold -- crisis is over right David.
-- wrong I think when you look at the actual -- -- particularly credit credits the private sector continues to contract.
And for me that's that the heart of industry and that means you're you're gonna probably be in a recession effort for -- -- -- thirteen.
All right so that that is the outlook and -- -- if you believe -- that may be in the next couple years we might also see recessions Shirley you're still putting money to work you like.
Both international exposure company's international companies and then some domestic -- but let's start with the international picture -- us show us the money where you putting him.
Over the you know for all of our clients were really working on a five year time horizon with our investment strategy sell.
Over the next five years we think the best performing areas going to be emerging markets.
Followed by Euro zone stocks and US stocks are going to do the worst of the three.
On an annualized basis over the course of the next five years by the way does that mean that you take issue -- -- prediction to 2013 recession we'll stay in Europe.
I well I actually think that towards the end of 2013 Europe will begin to emerge from the recession which should be bullish for stocks out there.
You know one of the things that we are saying is that over the next five years we expect the Euro -- stocks outperform US stocks but that doesn't necessarily mean it's gonna happen over the next twelve market.
We -- says and the amount to ETFs on that -- about the domestic bright spots that you see where would you then cover your bets there.
-- first domestic stocks go -- really sticking with the more defensive high dividend paying names.
Some of the undervalued companies that we see out there you know as an example apple I mean that the stock has just been clobbered over the course of the past few months.
We see a lot of value there is trading at a significant discount to the S&P 500 its trading at a significant discount to a company like Microsoft.
And we just got find it hard to believe that apple is not is strong and a company is another 499 companies in the S&P 500 for underway for just just just -- -- just surpassed.
Samsung in terms of domestic -- sales would have despite all the hype about galaxy.
Apple actually is now number one domestic policy right.
Yes yes it is sell I mean I think there's a lot of potential there and then I'll you know we like the other high dividend payers vodafone's a great play right now we like Seagate Technology.
Very undervalued great dividend yield cell.
We are going to stick with domestic stocks that are paying higher -- so that they can really minimize volatility for across still looks at dividend trade market Jeff have a good weekend thank you very much good thanks.
I think.
