A number of the world’s top investment strategists recently gathered for Barron’s annual roundtable to offer their thoughts on where the economy and markets are heading. David Herro, Abby Joseph Cohen, Bill Gross, and Marc Faber were among those who participated, and overall the mood was subdued. “On the whole, they expect interest rates to stay unnaturally low, and the U.S. to lead the world in economic growth,” writes Barron’s Lauren R. Rublin. “Yet, they doubt that will translate into robust gains for the stock market. Scott Black’s expectation that the Standard & Poor’s 500 will return 10% this year — an 8% price advance and a 2% dividend yield — was as rosy as it got. Marc Faber, we feel compelled to warn you, thinks the market already has made its high for 2015.”
Barron’s also included one-on-one interviews with many of the strategists. In the clip below, Gross talks about his outlook for how the current global debt overload will play out, and discusses where investors should be looking right now.
A stronger dollar and falling oil prices tend to help the economy, but right now those two factors aren’t helping stocks, Nuveen’s Bob Doll says.
Charles Schwab’s Liz Ann Sonders says she expects the bull market to roll on, but she wouldn’t be surprised to see some major speed bumps along the way.
Speaking at the Inside ETFs conference, Sonders said she wouldn’t be surprised if, within this bull market, we started to see financial crises rear their heads in areas like commodities and emerging markets, as was the case in the 1990s, Financial Advisor reports. She also said that “this might be the year Main Street feels better than Wall Street.”
Investment News reported, meanwhile, that Sonders said there “is a slightly elevated risk of a 10% correction this year”. But she doesn’t think the bull is done. “I have some short-term concerns, but I personally think the bull market we’re in now will be the best is our lifetime,” she said, noting that U.S. businesses “are sitting on a huge hoard of cash, which is at a level not seen since World War II” while inflation remains low. “The money is not multiplying and that has held inflation in check, but it has also kept economic growth low,” she said. “You don’t get an inflation problem when you have no velocity of money, but if we start to see velocity pick up, then I think we could start to change the thinking around future [Federal Reserve] policy.”
Sonders also says that valuations aren’t a concern yet, and that profit margins shouldn’t be a problem. “We know that profit margins are at or near all-time highs,” she said. “But unless you’re rolling over into a crash, it has not been historically a problem for the market coming off all-time highs in profit margins.”
Bill Nygren, one of the top fund managers of the past decade, says he’s been bargain-hunting in the wake of oil’s big decline.
What lessons can investors take from 2014? Don’t listen to short-term economic and stock market forecasts, says The wall street journal’s Jason Zweig.
Top economist David Rosenberg — long a bear — is continuing along the bullish path he started on last year.
Contrarian guru David Dreman says policymakers have created “a form of financial Ebola” that is threatening to wipe out the savings of many Americans.