Tip:
Highlight text to annotate it
X
GQ: Welcome to Market Commentary. The clocks have sprung forward, the markets are up. But
the economy doesn't seem to have gotten the memo. We bring in Wasif Latif, vice president
of investments at USAA. Is the weather the cause of all this? Is old man winter holding
us back? WL: Well the weather has had an impact. A
lot of folks are saying the soft economic data we have seen, other than the positive
jobs number last week, has been impacted because of the weather. However there is another mix
in the market this past week which is what's going on in China because there is a slowdown
and there is concern about their bond market. As well as what is going on in Eastern Europe
with the Ukraine and Russia. So that's causing a little bit of volatility and a little bit
of jitteriness in the market. The key, longer term thing to focus on is the economy and
how that plays out. GQ: So do you think the economy is ever going
to catch up to the market, because five years ago this week we hit bottom with the GFC...
WL: Right, the Great Financial Crisis, as they're calling it. The bottom was five years
ago and people didn't want to touch stocks. But here we are, really strong bull market,
touching new highs. But the economy hasn't caught fire yet. That's sort of the conundrum,
when money is being printed to create economic activity. It takes a long time to start to
impact... so we're at that juncture where the fed and other folks are thinking maybe
this is the time where the economy will start growing. I still think it's a wait and see
moment... if we can grow the economy on its own without the money printing.
GQ: It seems like the economy is waiting on one thing. What would that one thing be?
WL: The market and the economy is really waiting on one thing, capital expenditures coming
in from corporates. Typically, there's a bunch of different things that can drive the economy.
We've tried a lot of them. The one that hasn't happened since the financial crisis is the
capital expenditures. So the company is buying new computers, setting up new buildings, investing
in new plants. Those kinds of things really haven't happened en mass. But once that starts
to happen, you are going to see an interesting uptick in the economy. And that should be
reflected in the market. GQ: So we're looking for CAPEX. What over,
just over the horizon are you looking for, in particular, is USAA is looking for?
WL: Well we're looking at two things... which is economic data as it continues to come in.
And to see if, indeed, there is a soft patch that we are going to be going through. And
also earnings... earnings are very important to us. So the next round of earnings will
be in April once the first quarter ends. And we'll get a sense of, more importantly, what
the view going forward is from the corporates in terms of their capital expenditure plans
and those types of activities which is going to help the sentiment move forward.
GQ: Thanks Wasif. As always, we stand by ready to help. You can call us, visit us on mobile
or go to usaa.com. Thanks for watching.