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Is the Rally Over?

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  • Description

    Wells Fargo Chief Portfolio Strategist Brian Jacobsen on his belief that market pullback is only temporary.

  • Duration 4:15
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Some markets rally over as they're still more to come the markets are pulling back right now on worries -- the -- May put an end -- it's easy money policy but Wells Fargo chief portfolio strategist.

-- -- -- and says that there are some areas where investors can make money no matter what happens and he joins us now great to have you.

Brian on -- -- -- things and a lot of questioning about what's happening with the markets we are -- a nice ride we are seeing a pullback our biggest since November.

So my crush any ways is that is this just a temporary pullback -- have we topped out at the market.

Well I think that this is just a temporary pullback I would actually looking at buying on the dips in this particular situation because really if you think about some of the fundamentals they haven't change materially.

I even if the Federal Reserve is not going to be providing as much liquidity as perhaps what people originally thought that they went.

I think that the fundamentals are there certain terms of corporate profit growth.

And just global economic growth to really support the equity markets going forward so I'm not that surprised that we have a little bit of a pullback here but I view -- more of that have an opportunity to take on a little bit more risk as opposed to running for the hills.

O'Brien how concerned though I have some of the headwinds have always been out they Europe seems to be starting to kick up a little bit the the PMI out of that region was all full -- sales falling off a cliff the Greeks is striking again and so on that's just Europe we've got.

Consumers are they getting hurt by high gas price is the payroll tax hike and it goes on and on.

How concerned are you that this economy really is just kind of a stuck in neutral.

Sure there's a lot of us third of limping along here with the -- it seems like but that's mainly in the developed world that's mainly in the United States and in Europe and what I like to do is look for more about casting a global that's.

Looking for investment opportunities and I think that that -- despite the slowdown.

In Europe and the slowdown in the United States these are somewhat temporary.

Occurrences in that it's not necessarily fundamentally changing things that are taking place in the emerging markets like there's a lot of reforms.

In Mexico that I think -- very positive for their markets that's an area that I like.

I in China they're gonna be having -- another.

Congress or I'm sorry they're going to be having a new leadership really take control in March there's the possibility for some fiscal stimulus there I think that there's some good opportunities -- you have to look globally for them.

And what LC liking specifically here in the United States and know that you perceive this as a temporary pullback so what we buy right now as we wait for the markets to decide.

Himself.

Well I think that there's really -- three main areas that I like I like energy stocks.

I like health care stocks and I like technology stocks not necessarily information technology stocks I do like some of them but that the technology broadly defined just those businesses that are involved in helping other businesses produce things more efficiently with fewer resources.

Let's face it the cost of hiring somebody has gone up whether it's due to.

On the health insurance costs going up or if it's because of taxes or what have you.

So as a result I think that businesses are going to be looking at making more investments in property plant and equipment as opposed him to workers and as a result I want to really be investing in those businesses.

That are in the business of helping others do more with -- What of the earnings told you Brian because it seems to me that the bar set so low that they you know markets seem to cheer when the estimates -- of those estimates -- -- -- how.

You know you can share -- something that says that easy to attain a view like I mean and that's for the -- and its guidance from these earnings reports but great is that.

That's correct the guidance isn't really all that great but it's not as bad as what I think a lot of people were thinking would be.

No one thing I have to point out what you're absolutely right saying that it's not that hard to beat these low estimate yeah.

And in fact a lot of times about 62% of the time businesses actually beat the earnings per share estimates which means that analysts tend to be a little bit too optimistic.

Fail or too pessimistic I should say -- when they're coming up to earnings season.

But I think that what's really important is businesses are beginning to beat on the top line.

In terms of revenue growth that something that we haven't really seen all that much of this past quarter as we're getting through earnings season we're seeing that about -- percent of businesses are actually beating.

-- estimates for revenue growth and that's the key thing to really be watching.

It it sure is Brian -- thank you very much for your time today.

Nice to see you thank you thank you.

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