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Let's get writes in today's action we have John -- -- I ask capital management president.
And chief investment officer he's warning of a major market pull back we will hear how much.
And Larry's show -- in the -- of the CMA he started early Larry I got your notes at about 9 o'clock this morning.
Are we were wondering exactly how the market was gonna handle that news from Japan.
That they're not gonna be pretty war again right now any way but we've managed to.
Managed to weather this or better than a lot of people thought we would even though we ended up with a triple digit loss.
Yes David you're exactly right and we have Japan in action coupled with the fact with the ongoing fed tapering format.
That's enough to cause further -- -- of all assets people are worried about the wide international price swings.
And thus the stocks are for sale but the real story David I think is that.
Stocks in the US can't be accused of anything right now except for healthy consolidation.
Yeah there was some style offbeat music came out around the world however right now consolidation digestion.
Looking forward to June 19 and -- -- press conference and at John I know we you're your bearish -- -- in -- at least in the short term but.
Today it was kind of an interest today because we did see about a percent pull back -- most of the indices.
But we didn't see that massive profit taking that a lot of people say it's coming.
Well where were more concerned about the intermediate.
Time period we we think that we're living in an artificial environment.
Do have fed policy.
And and the the market really has -- been -- a secular sideways bear markets since 2000 and we believe we're still there and we're going to continue -- that for at least another four years.
And and because of that because of the the artificial interest rates that we have and we think.
Profit margins that are excessive at this point likely revert back to more normal levels.
That we could be looking at a at least a 10% correction possibly as much as such -- 5% well -- -- well how little -- out.
-- let's not let that comment has got 25 I mean I know that's on -- high end what you think it's possible we could have a 25%.
But they have if if we start to see inflation in the next couple years which we think is going to happen we think that.
There because of all the Central Bank easing in the developed world this money is so leaking out into the developing world which is very commodity intensive and growing very rapidly and then what's happening is we think we're gonna see much higher commodity prices over the next few years.
And these raw material prices are gonna come back and -- -- called for many manufacturers and companies in the developed world.
Well Larry let's let's look at interest rates for a while of course everybody's worried that -- ten years gonna go up to 2.5.
It ended I think -- just about two point sued today that's still very low but when you think -- where it was about a month ago.
It has jumped about 30% that -- some concern right.
Yeah I think it's concerning a lot of people in the maybe not as traders behind me you're right and that -- get -- went up like 46 basis points in May alone.
However -- -- reacting quite OK with that it seems like they're they're moving up.
For the right reasons that we're seeing growth not great growth or moving in the right direction so again people are worried about the trajectory that we moves so far so fast.
But however and please don't seem to mind the fact that we're at the levels we're at right now about to Swanee -- tenure yelled yeah I'd actually came down three basis points ending -- at two point 18 below 2.2.
-- god do you think that interest rates are going to be our our weakest point in the market right now while.
Hot I I got on an intermediate and longer term basis I think there were on a trough a long term trough of interest rates.
And it's inevitable that they're going to be rising at some point the question is whether or not they've -- a little too far current way and -- might back down again but.
If if inflation starts to develop as we think it will we think that interest rates -- could move up a lot.
Well if you think inflation is going up it's not surprising that some -- picks involve those.
Those commodities that might be hit by inflation like fertilizer you -- is one of your picks.
You like chemical which is uranium company watt.
Well because we we feel.
-- it's inevitable that there going to be more nuclear power plants.
China for instance has more power plants on on the books and under construction next currently operate.
It's quite possible that Japan is going to have to go back and -- operate reopen -- Their nuclear power plants.
So that around the world you're going to see plant construction and there's going to be a a heightened demand for uranium.
Even after what happened in Japan and even though the natural gas explosion and I'd -- should use -- work its budget.
Natural natural gas substituting for a lot of the coal fire plants that we have around the world -- natural gas via better bet if you think that they have we're gonna switch from ball.
Well I I think we're gonna need all the the sources of energy that that we can find.
Where -- are very concerned about the long term supply of oil.
These companies sell oil and gas companies globally have have been increasing their capital spending by 12% a year.
And there are only but they've only been able to increase our global production by two percentage -- and if you look at the last six years.
The growth in production.
Globally has site has been even less than that.
So that there's serious problems ahead in terms of finding.
Energy of all sorts.
And especially at reasonable prices so I I see demand for all of them.
Larry what about commodities do you see his same concern out there and commodity bill in the middle of the country that that we are gonna have higher inflation as a result higher commodity prices.
You know I think John spot on I think your point yes long term I favorite have a what I call inverse stagflation.
-- continue to underperform -- -- paper assets stocks and bonds.
Al performance of all commodities now I have ever in my fazed by saying that for what's happened the last six months to -- I think long term just -- -- emerging market around us in the world I do think we'll have a sustained outperformance of the commodities sector.
Larry's show over thanks so much my friend John -- good to -- -- was well and we.
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