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Sue Herera: Our market mavens today Drew Kanaly, Chairman of Kanaly Trust Company and Bill
Buechler President of Barclays Partners Asset Management. Nice to have you both with us.
Pleasure to have you here. You know Bill let me start with you. Your both generally bullish
on this market, what are the under pinnings that you see enabling the market to continue
what seems to be a daily march to a new record?
Bill: Well I think as long as the federal reserve continues to supply the liquidity
and we still have the big private equity players out there waiting for more opportunities I
don't see any other way but for the market to continue to trend higher.
Sue Herera: Drew do you agree?
Drew Kanaly: We do agree, it's good FED policy, it's good tax policy, it's good regulatory
policy, and good trade policy. These are the drivers that have gotten us to this point,
their also in place so we see the market going higher.
Sue: You know Bill, and I'll ask the same question of you Drew, weather either one of
you are taking profits, taking some money off the table because there are those who
say that the markets been marching higher in small increments but to new records on
a daily basis and at some point we need a little bit more of a correction. Bill you
first.
Bill: Well I think when we do have a correction it will be sharper and more difficult then
we're used to dealing with. But I think now's the time really to change and focus on some
of these natural resource stocks and in particular to look overseas. I think the best opportunities
are overseas and the big private equity moves go to overseas with the Canadian stock today
and last week the British stocks. So I think you want to look overseas as the real opportunities
here.
Sue: Ok, and Drew what about you?
Drew: Well a balanced investor hopefully they've been a little over weighted stocks the past
view years and it's probably time for them to start thinking about getting back to their
mid point where they started all of this. But they have to be careful because there
is a better then even chance we are going to see a FED rate cut. Maybe as early as August
or September of this year and I think that will be a real surprise for the market on
the up side.
Sue: What will trigger a rate cut?
Drew: Well what you got right now if you follow the 91 day T bill is trading at about 485-486
and typically the FED follows the T bill. The T bill has been trading below FED funds
for quite some time. Probably the drivers behind the FEDs think that at this point if
housing continues to be solved, and if maybe more unemployment numbers come in,less favorable
retail, their gonna want to respond and the T bill is pointing the direction.
Sue: Bill as I understand it you expect the FED to hold pact.
Bill: I do. I think that the federal reserve will err on the side of growth. But I think
that their idea of going through this whole year basically is let the market do the work
and there will be times where people are looking for a rate cut and then there will be times
for a rate hike. But in the end I think their gonna go through the entire year doing nothing
and stay in status quo.
Sue: And if they do, does the FED matter at all to the markets at this point, Drew?
Drew: Yes it certainly matters. I think they are all listening for the marginal language
coming up in this weeks FOMC report. I think they are going to be looking at the FED to
do something if you see any more softness in our domestic economy.
Sue: Gentlemen thank you. Pleasure to have you here Drew and Bill. Talk to you soon.