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Russell Investments Chief Market Strategist Steve Wood explains how volatility will burden the markets.
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-- absolutely and despite being a positive territory for the year.
Major indices are attracted and may in the -- now this choppy up and down trend that's something you're next -- expects to continue to.
Joining us now today it's a market -- segment as -- work.
-- -- market strategist for Russell investments in Steve.
It's it's -- -- -- looking at you know you're you're optimistic but you tell us the buckle our seat.
-- I would say so.
I think volatility is gonna be your constant travel companion for a while it has been it's going to be now.
We're still looking at the equity markets in the US ending up about 9% which is about a thirteen 72 and the S&P.
A 760 on the -- the Russell 1000.
You got most of it now but it's gonna be volatile ride you're you're noting housing manufacturing.
There's a lot of issues you're you're gonna have the volatility that the gift that keeps on giving which is Europe.
A really talk about that this year next year in the following here but ultimately.
You you're looking at a very strong corporate earnings environment you know profits -- Up a very strongly year on year and over last two years you're looking margins being fat two plus trillion and corporate balance -- so ultimately stocks are responding.
To very healthy corporate environment.
And we've -- the corporate earnings picture certainly on a strong and positive side but on the flip side too big wild -- you talked about that.
Problems in Europe we also have oil prices up higher commodities across the board so how those two -- is.
Start to move things for you in your outlook when we start to see increasing pressure there.
I think you've seen Israel -- you're seeing the negative news really grab the headlines whether -- Japan in the Middle East.
And and that that psychological problem that Americans have gas being even remotely market price you know we're used -- very few guest so that really -- -- consumption enthusiasm.
And that's really doing battle with corporate profitability.
I think it's gonna be part of that choppy ride but as oil continues ago well.
Consumers are gonna have to make difficult decisions.
But ultimately we think that high prices are gonna sell high prices I don't think you get to that 1213140.
-- oil.
I think that's really stretch is gonna be higher and housing is going to be some -- going to be with us for -- good long while so you kind of getting he's being Constance.
The new information which changes markets is grinding.
Upward mean it's not great and it's not robust -- it's kind of grinding upward almost under the radar screen.
-- but to that point you know we're -- we look today we have four pieces of economic news overall disaster unmitigated disasters are markets up because of dollars down.
Mean how can we make that transition from a market that that response to positively to negative American economic news the one.
That response positively in other words could the dollar be up and the stock market -- -- can't make co exist -- -- they -- but what makes that had.
And -- I think fundamentally you get Europe which is in the midst of a number of policy mistakes among them is raising rates too aggressively.
Too early so we know that the dollar being weak as a signal a very accommodative fed.
For good long while which is gonna be better for risk assets.
I think also one of the bright spots in the economic picture is manufacturing longer term.
And exporters -- that weak dollar's gonna help that position is well.
So I think the United States is just such a large piece of the global -- China slowing down dramatically there really hitting the brakes hard in China and Australia emerging markets are really hit the brakes hard and the -- is still hit the gas so in world relatively options.
The US to start to look pretty good maybe we come in last place in the ugly contest.
Of -- equity markets and currencies but I think there's a lot more business opportunities here certainly than they are near.
It's all about context what is vowed to -- you that you're foreseeing -- predicting -- 9% gain in enmities this year.
We're not international markets because many of our gas talk about kind of writing out the weighed in international markets emerging markets how should your investors.
Mean positioning themselves across various.
Across various market.
It's gonna depend on the -- as -- if they've got a shorter time horizon let's say 1218 months or less.
They're gonna see serious challenges in emerging markets in commodity based.
Economies so I think there's real policy -- are raising interest rates rather aggressively there they got real inflation problems.
But if you've got two or three to five years out then emerging markets commodities look like a very very good opportunity for a lot of people -- you got to be willing to stick with it.
So right now globally diversified.
Equity oriented portfolio.
You need to get some credit in your fixed income and a lot of that's gonna come from emerging markets a -- that's gonna keep even come out of core year looks to be for a longer term strategic investors.
Shorter term I think the US economy.
Relatively could be a modest surprise positive for the 2000 let.
Like -- some optimists.
Yeah we don't get that much around here has is -- certainly lately.
Trying to put like -- and America move -- straight ahead but that's finally let that a lot of people saying that handed that's why you're unique and we're gonna bring you back -- big -- you're right -- thanks thanks a -- the book for.
