Transcript for Hiring Stronger, but Economy Not Out of the Woods
And what my private -- -- and redevelop the podium this afternoon. Women board directors from the stock exchange listed companies and 120 women on board also celebrating international women's day and so is official trading. Done for the day. And gavel down for the week Friday march 7 in the books -- -- -- down Cutler in New York markets mixed today after better than expected jobs report. Easing some concern. Over the state of the economy. Here's what it happened a 175000. New jobs added but the unemployment rate that rose to six point 7% up from six point 6%. -- take a look at how the Dow's closing out it is in positive territory up about twenty points 161450. NASDAQ -- -- They're both in the red. So to put some context all of that I want to bring in one of Austria's most sought after strategist Robert van Battenberg he -- director of market strategy for new wedge into -- research used by the top firms and Wall Street. Get near the ground on what's happening outlets make some sense what's been happen -- rushing past couple of days and really these first couple of months. -- into 2014 to -- thanks for being with us and I -- -- -- about the jobs report a minute but first I want to talk but the market market wire stocks mixed -- -- -- given that number. Well what did the single most important. Drivers of the stock market has been. The bond buying program that the Fed essentially started. Way back in 2009. And has been going on ever since then. I'm pretty much. -- so if the news gets too good. The Fed may be inclined to take off or start to phase out of that kind of but what we call unconventional monetary stimulus to stop buying bonds. That of course puts a damper on stocks. Waiting in the wings of course is the skirmishes that are going on -- the crisis I should say that's happening in the Ukraine which is still. Somehow. Putting a damper on headlines and creating this the risk so it's not all jobs and fed it there's also some geopolitical risk. I wanna talk about the bond -- program it is to -- parts of the changes that are -- coming up. By that. But but first -- -- a record rallies over the past couple of days is there one single driver is their common denominator among. Well -- it did this is that thing this is the irony so you know in January had substantial sell off that was related to things that happened the in the emerging markets. And then and -- dead the risk -- -- concerns about these emerging markets start to fade. And then mural arts comeback in him by the market back up because they believed that the -- Remains very saying Quinn remains very in a very stable active mode. -- and then the subtly the new starts to get better and then investors that get concerned about you know what's the Fed going to do now. It's not just the bond buying program but it's also the level of interest rates they have promised to keep those -- had almost zero until I -- What the market expects until 2016. The news gets too good and then he goes acts to face and start to change its it's a weird. Problems -- -- a dichotomy here but that's kind of what's happening in the market that bad news is good for stocks. It and let's dive right -- as far as the bond buying program because it's at what 65 billion dollars a month right now. The -- expected to reduce that down to 55 a drop of ten billion dollars. So has the market essentially already priced that in other words investors know that that is coming down the track and so therefore there's not that knee jerk reaction. Yet know -- The reduction is -- in all -- current pace is at ten billion per month cut back. Op that's priced in but general if if the economy Sally gets too good then defense may say hey wait a minute we need to cut back on -- bond buying program. Buster -- we need to. Solve change our minds on. And that is a frightening thing for the market that's why. You see sometimes these guided knee jerk reactions. On what's. Well let me ask you then I guess for the homeowner or the potential -- -- -- out there given the fact that rates are so great so competitive right now is now the time to -- Bob well you have to buy a home I mean their rates are still very attractive and I don't think that the -- is going to raise rates any time soon so you still have some time bad. Keep in mind dad. If and when we are getting into this points -- buy -- markets starts their pricing and -- -- at rates to rise then you'll probably see a lot of people coming into the market trying to lock in those rates before they go op. And that's create some sort of Seattle he -- people started to chase homes. And that. Get all -- getting whole housing shortage so for people. Thinking about buying a home I think this is still good time to start you know looking around -- what you want. -- it's that you bring that plant as far as he's chasing around and in creating a -- of housing shortage on their because. Boy what what a situation that would create it I mean what a difference in just 45 months time if in fact that worked -- Well we saw something similar in May. All you know the economy greatest -- -- -- All the rates started to pick up a little bit and then suddenly everybody try to buy -- home before they were -- -- before rates started to go up and admit this is mortgage rates. So you've got it like temporary housing shortage and that kind of faded away to its year end. But there's -- if there's not that many homes for sale of certain areas where there's really tight housing market's like for example California. Certain areas in the know -- the east. Op yet then then my little burst in an activity -- subtly creating a where am I gonna find my home. For armchair investors are those that are at least watching their 401 case. Where do you see the best opportunities for growth right now going to 2014. Well I think still very interesting area is says some of the energy -- I think about it I mean we've seen how vulnerable the world markets -- too. Off and get out certain large countries that not necessarily America's best friends supplying energy to the world. So as you know and Russia is one of the big supplies to natural gas of the world. All they can use dead -- being used -- as a weapon to coerce the west to. Acquiesce due to play along with their plans. So the US is looking for ways to actually -- -- -- natural gas -- rest of the world to alleviate this kind of up pressure. So natural gas prices have -- cheap for a long time I don't think they're gonna stay that way I think there are a lot of reasons why natural gas prices -- -- one of the -- -- if he gets -- to export more gas to the rest of the world. Four bowl -- economic and strategic reasons. All other areas -- for example which at the very interesting -- of course social media but you know some are the valuations have been kinda crazy. Solve some of the cyclical names look very good -- going into the second quarter. Let me ask Jesse about this and Robert -- -- the five that the US may be actually supplying Ukraine. With natural gas which obviously would be ironic move given the close proximity to Russia. Yeah I. I think that's not directly possible because the US is still building out its gas export capacity. It's very difficult to build that and there are permits they are construction taking place so I'm thinking more in the medium to -- longer term. But there's definitely a a lot of projects right now to export natural gas not only to Europe but also to -- yet where gas is a lot she more expensive. So I think this is immoral -- -- story and it's looks they'll -- be very attractive story so if the US is able to tap into some of those markets you expect the price to go up. -- It will be talking -- just got out of our broader scale than -- ups and downs this year what about equities how are you playing that. Well as long as the Fed stays they have -- by side you know the market's -- I think -- -- and will continue to see support. There are some risks. Like we saw today. That if the economy gets a -- only proves too quickly that people get concerned about you know what's the Fed going to do. And -- of course there are risks in the emerging markets and that usually side of an outline a risk that subtly columns that hits the market. And -- just go away after a couple of days or it can really cost them. Mayhem. The biggest risk I think or one of the biggest risk is China. Which has done so well over such a long period of time -- now. That that banks have expanded to balance she did have -- a lot of money to corporations you see default rates picking up there. So -- that's something I keep my eye on but you know that's that's an external risk here in the US is -- the Fed stays accommodative. Fed at that the stock -- management and remains very buoyant. So you know once the feds basically stops which is really -- year and I think -- and department will start to get very happy. I want to talk with a big number which is big both in the literal and figurative sense the jobs report came out today -- some economists that the economy back. Saw 175000. More jobs added at the same time there was a real big rally knows strong reaction on Wall Street from that. -- -- -- and -- said you know you see if if they have the job market improved to quickly people get concerned about what the Fed is going to do. Also unemployment rate picked up as well a little bit so you know overall although the report -- very good. A bomb it Watson's -- It's blue skies. So you're looking at the job -- -- at the same time it's also stimulus and the side that. -- kind of balances editions it bounces but could be kind of those competing forces. Yes exactly. What about the economic data itself on the our investors. To how much stock and I don't -- to use that -- and and and pine. But how closely are investors look at the economic it look at those numbers that are coming out there. Well you -- -- -- -- is that goldilocks environment right where the economy is not to give -- robots that doesn't grow too fast that dozens you know really is going into this -- -- And that's the kind of environment the stock market lights because that allows companies to book earnings growth but it doesn't really. But cause a risk to some -- the the the the monetary stimulus from the Central Bank. So eight that if if if the economy accelerates to quickly people get concerned hey wait a minute you know I -- really like what I'm seeing here because. You know the Fed may suddenly start to become more hawkish that's how we call it when the Fed gets. Concerned about hey you know maybe we should stop this whole -- -- stimulus. So you've got unemployment rate is up at six point 7% up from six point 6% where the opportunities -- for those that are looking for work. Well -- some areas of strength that we've seen you know it oil and gas sector -- -- to be very strong. Not just month over month but -- been robust you know for a number of years now. You have you know -- certain professional services like engineering. Architecture. Lawyers accountants. -- just -- robust growth there. Auto manufacturing -- of job growth over the last year you know the both of the mess they get to foreign car companies that have plants here in the United States have been hiring people. Car sales have been great so they have been adding employees on acting that pride that will continue. So that's kind of the effort to strengthen that you have the usual areas like. Health care. It's the local government actually has been hiring people so there are some some pockets of strength out there. You let me ask you that I guess in the reverse of that those of the opportunities where you see that threats where he's the challenges what markets are sectors are starting to kind of condense and streamline and potentially have potential layoffs. Well there's there are always like -- the federal government is laying off people. Retail has been laying off people -- -- -- -- -- season was kinda disappointing. Saw there have been hiring a bunch of people in December and November. To staff their stores. Now the laying off people so the mining sector has been laying off people. So it's it's not certainly not you know especially with -- in areas where. You know four. -- to people people in the age group between sixteen and twenty it's very tough to find a job the unemployment rate is still 21%. For those folks. -- that that's -- and edit stuff for them to actually join the -- to find a job to begin with so that it's not it's not -- -- overall very bright labor market is just it's improving gradually here at at -- at a snail's -- so slowly indeed Robert van -- from new -- Robert thanks so much we certainly appreciate your time and your insight always come back appreciate -- Of course even much in the closing now report take a look at how the Dow ended the week up thirty points 161452. I'm Dan -- New York with the dot com related headlines.
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