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And he hitting new highs today I'm Fed Chairman Ben Bernanke's comments second bond buying will keep going going down.
Our next guest thinks the markets may have actually been resilient during the Fed's latest case -- brightest.
Steve wood is Russell investments chief market strategist -- -- reason I -- -- -- up 5% pullback.
Which is all that atypical Alba so great -- is that even a headline period I would bet I'm -- they did kick and scream I don't know I mean.
Resilient and that market didn't tank I get that but these -- -- lean mean a lot of.
Lies about your and they responded -- but you know that that's normal volatility in any.
No upward move -- to get three to 5% -- response something that big.
May not be necessarily all that headline worthy but they did respond back in I think right now there is some fundamental component.
Is that all the Fed driving equity markets but there really is there a -- between those two and one could argue the fact that they even had a temper -- -- -- ridiculous because it's coming regardless.
The question is when I went to the training wheels come off this question I -- a second crack at and it can be a little bit later than early I think September might be a bit premature.
I think what Bernanke did -- he -- it's another test -- put a charge to the wire.
To let the the market know that it will not be Q -- perpetuity is not -- you know gone forever.
But we are kind of premature right now so if you look at where the Fed is right now I think they want as much.
Policy flexibility brought back to them.
And whoever the next chairperson is going to be.
Of the Federal Reserve I think that chairman Bernanke -- that person with the most degrees of freedom possible and not paying him or her into a corner right -- preset course that we heard yes.
That the -- -- watched a little bit they've got.
I thought I was good at keeping expectations low -- -- Wall Street it has beaten me -- with this keeping the bar really super low so that we can watch these companies to book written on terms of earnings yeah.
-- there was that that's you know a very typical as well you know reducing expectations and then beating the much reduced minutes he now isn't it Michael you know we're not seeing the top line growth.
I think 8080 when he -- 500 companies reported seven eighths percent -- -- earnings.
But by the revenue and every you're -- right I think that's that's where Wall Street is gonna have to look and and for our our.
For perspective -- security selection.
Security selection in that multi at the par -- you wanna be globally diversified multi -- and security selection actually managed.
So revenues are going to be challenged mean this is a unit and improve environment but it's not a great environment.
What are the company's best position on the top -- to really help you hit that.
Better numbers do they have pricing power do they have good demand for their products and try to identify -- company.
Yes it's it's like a best of breed kind of thing you pathetic -- best of -- in -- -- it's not -- -- can't make effective planning.
What you you you can use that to condition your portfolio but there's there's.
The macro there's a multi -- but there's security -- -- where you -- -- people than anything quiet I think right now hello from a valuation perspective you've got emerging markets into bodies for a long term and I do stress long term investors.
Valuations are very attractive but if you look at sentiment momentum.
US US equities.
Bonds are less unattractive than they were a hundred basis points ago but they're still not that attractive so look at good companies in the US stock picking security selection.
In Europe but right now we think that the market could be a little flat -- -- for low -- -- digests know what's gonna happen with the Fed.
But they're we think that risk assets beating inflation lets you rate of return is going to be something that's gonna take discipline.
Let's just curious what a lot of time these days if it -- -- back.
Or is it tougher for the marketer for a -- I can we say long -- very loosely what does that mean anymore because for ex trader it's -- -- Yeah and have for us we would want to push out.
Mean six to twelve months I think would be the short end of an investment horizon I think for a lot of people that we would want to talk to.
Got a quick trip because of the longer you push out that discipline strategic.
Prospective them but the higher probability statements you can make.
So did a day week to week month to month that gets a little bit more as I look -- Alex near Montana's two years I would like look out.
No I -- increments of years in Q if you look at like emerging markets valuations are strike.
But right now there's not a short term catalysts and 2013 -- first effort when he fourteen for emerging markets the commodities.
But there are a fundamental case building where valuation.
How do you play this and if you're looking at two years on long term investor in putting money away for retirement.
Two years from now.
I I have to believe I think it did punch bowl will still be there and there's going to be some semblance of it.
Interest rates -- and it's still not going to be through the roof right so it's kind of late days of -- over.
So let's say the Fed is even modestly successful they're girls let's say I hit 22 and a half percent inflation rate that means for someone is very young as you are you've got this long -- -- yeah -- -- a a fifty year time right.
-- -- -- -- -- -- You've got hit two and a half percent let's say plus whatever you gonna need 354%.
Drive down so that speaks to risk assets and I think a big part of Q -- what Bernanke's trying to accomplish that isn't.
-- getting -- by the markets is he wants to condition expectations.
So for investors believe that safe haven fixed income or let's say government bonds -- are not gonna generate they're needed greater return.
He's forcing them to come to the conclusion I must take more risk than I feel comfortable -- so what we're saying is make that globally diversified multi asset risk acceptance security selection.
And short term volatility is at your -- went.
That's an increasing pricing is that.
That average guy is still not and the equity market so there's still we have not seen a great rotate -- we have none -- the data and evidence is premature at this now I now see what Russell investments.
Thank you talk about this -- -- -- thanks.
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