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A case slightly the markets have been focusing on the here of that -- bring home -- how.
Well now we're seeing a reversal of course today just for -- reporting -- a 172.
Joining us is John can now investment strategist and economist with -- financial it is so great to have you back with us here John and you know if you look at history the stock market.
Usually rises after -- that fed begins raising interest rates.
Because the expectation is the economy is growing and gaining momentum.
Could this rally be because of that -- -- -- as opposed to now we have a short term memory and we're gonna hear from the Fed this weekend.
You know the likelihood is in the foot will stay on the gas pedal by way of quantitative easing.
It may be finally dawning on that equity markets that that's indeed the case because for a -- -- everyone was nervous all the Fed's gonna taper and that means are tightening.
Of course that's not the right taken the -- -- You know they're still basically cutting interest rates are just not cutting them by as much each meeting so yeah and and the -- has told us that they're gonna.
Do this quantitative easing and until work so if there are tapering it.
That means it is working if it's working that means the economy is growing it's generating profits and that should be good for stocks.
I think it's still gonna have -- about a lot of volatility and market says as participants come to come to grips -- this.
That the Fed is not tightening and -- there what they're doing here is allowing kind of the markets to take over from the Fed.
And and I think -- at the end that's going to be a good thing I think it's a transition.
That's going to be difficult as we've gone through here in the in the last three or four -- You think we're in that transition right now apologies for the audio blitz there but.
Do you think that's at the markets reacting -- -- are trying to adjust for.
If you know I think -- we did the transition started I think when Fed Chairman Bernanke got up before the joint economic committee of congress on May 22.
And they had a great prepared Testaverde but very dovish and then in this Q&A kind of stumbled right right and and that English -- -- her.
Right they would they would -- next few newspaper now that they have a chance on Wednesday to sort of reset they can go back and say listen.
I know we said in that Q&A but.
Listen there's two different things here there's.
Tapering quantitative easing and there is raising rates yes we might -- but only because economy's getting better.
But word no way shape or form going to be raising rates any time until 2015 -- Learn something a clear statement from this is a big fed meeting because you get the economic projects for.
Projections -- we also have the press conference that this is to your point John Bernanke's chance to really set the record straight so is he going to be.
More clear less ambiguous than usual.
I -- is I think the Fed pretty good job of being.
Way more transparent than they have in the past over the last four -- five years.
I think there was that stumble back on May 22.
And then this does give him a chance to set the record whether or not he's gonna tell us saying you know the market.
-- the Fed is looking for a 165000.
Jobs month the number gonna taper I don't think we're really get that kind of transparency it will be nice in the markets will love it.
But I think your your gonna get a clear separation between.
Rising rates yes we're not gonna raise rates and tapering I think the Fed's got to make more clear that a -- is not an interest rate hike I think that will help.
If if they do go the extra step and saying you know here's the jobs number -- -- -- -- -- fantastic but I don't but I don't think that's gonna happen.
All right so we buying these days so -- navigating this rough waters.
Well you know it's been for both.
Fixed income and equity markets has been quite volatile since may first Bernanke.
On May 22 made it even worse.
And I think what you're seeing now is that people were kind of convinced that the stock market rally is for real at first they were gonna.
-- for their toes in the water buying.
More dividend paying stocks may -- utilities and Telecom.
And then they -- -- got burned when rates started to rise to those are two very rate sensitive sectors.
And more recently you things you seen.
Industrials and and then tech technology work now health -- work almost the whole time.
So I think for the second half of the year if you do if they expect the Fed to give us sort of all clear.
Might think you might come back to those utilities and Telecom stocks but that's really for the -- When your -- right smack in the middle the economic cycle hearsay your hot like all cyclical or on the offensive you just really have to middle of the so -- -- yeah.
That's right you're.
You're -- -- -- cycle you're building earnings cycle I think if you're starved for broke you're gonna be looking at things like technology like Mike what industrials I think that -- sectors right now that are.
The most questionable would be.
Materials and an energy those -- have been driven recently more by emerging markets in those emerging markets remain -- so I think you can.
Make the case for almost all sectors but those who participate over the second half of the year John can now Ellis pleasure.
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