Watch Video Now
Video Length: 00:04:01
Need Help?
|
What: Discussion of recent market volatility.
Where: CNBC's Market Mavens
When: March 17, 2008
Who: CNBC's Sue Herera, Darin Richards (AKT Wealth Advisors), David Riley (Rydex Investments), CNBC's Michelle Caruso Cabrera
Sue Herera: Even as we see some of the biggest names on Wallstreet fall, many are wondering �Is this a sign of a bottom in the financial markets?" Here to tell us, Darin Richards, Chief Investment Officer at AKT Wealth Advisors, and David Riley, Director of Portfolio strategist at Rydex Investments. Welcome gentlemen, Michelle�s with me on this one too.
David Riley: Good morning.
Darin Richards: Hi Michelle.
Sue Herera: I�m going to start with you Darin because you had been putting a lot of your money in the overseas market. Some say, the capitulation that we�re seeing on Wallstreet is still to come because the market held up pretty well this morning. And others point to the route that we�re seeing in the commodities market as an indication that we may be hitting a bottom. The money�s coming out of commodities and its time to go back into equities.
Darin Richards: Well I guess we�ll have to see where that commodities� money goes. Right now it looks like its going to treasuries because we�re seeing yields come down. I think we are�I think the market�s looking for a bottom right now. And we have been a little bit defensive. And I keep waiting to see an opportunity to wade back in and so far the economic news has been nothing but negative. And what I�m looking for is something in the fixed income side: liborn(?) maybe to come down a little bit, credit spreads come down a little bit�some kind of liquidity-related sign that maybe this market�s finally stabilizing and flowering(?) and maybe we can have some sort of rebound here in equities.
Sue Herera: Yeah David, you�re still very cautious as well and you�re worried about what�s happening a-la the Fed�s action Sunday night.
David Riley: Yeah definitely, I mean clearly the market�s looking for a bottom and people feel a sense of capitulation. But we saw short-term rates come down a couple of months ago and they spiked back up again. The Fed has thrown a trillion dollars worth of liquidity at the financial system and still we�re going through this. And I think the reason we�re going through this still is pretty straight forward. That is; not all the write-downs associated with the bad mortgage debt have been announced�we still have quite a ways to go through it. And that�s the catalyst for whatever turnaround comes. I don�t think we�re there yet. We�ve had about $200 B worth of announce write-downs and there�s still some more to go.
Sue Herera: You know Michelle, what was it last week you and I were looking at the price of gold, looking at the MF Global then, and we both talked about the point that perhaps where the capitulation is going to come is in commodities first.
Michelle Caruso Cabrera: Yeah and we are starting to see that a little bit today so-have(?). Right I guess the question is: Are some people having to sell their winners or are they assuming we are going to get to that point you know correlation gets to 1 and everything starts to sell off. You know Darin, I�m wondering�the reaction today, are you surprised, I mean I think people really expected a major route. And believe it or not, technicians would have thought that was a good thing but we don�t seem to be getting it.
Darin Richards: Yeah as I was watching CNBC last night and seeing the selloff in Asia, I was a little bit nervous that we could have a pretty dramatic selloff right from the get-go. And we went dropped 1.5, 2%. Kinda stabilized, came back up, and then dropped back down again. But I think if we can finish today, down less than 2% and then maybe even for the week, somewhere flat I think to me that�d be a sign that we�re really getting close to flooring the market and potentially getting higher.
Sue Herera: So David, what does the Fed then have to do in tomorrow�s meeting in order to, if Darin is right, help the market along�ease those jitters.
David Riley: Well they can�t disappoint, that�s for sure. And disappointment would be anything less than 75 basis points in terms of what they do with the Fed fund target. 100 basis points isn�t out of the question. If they did 50, I think they�d disappoint and we�d be back to where we were. I think the other major risk here we haven�t touched on is the dollar. The dollar is approaching a freefall right now, and I think that has major ramifications not only for what happens in the commodities markets and whether there�s a turnaround there, but also in terms of how the equities markets behave and I would keep a very very close eye on the dollar and whether it starts to gap down.
Sue Herera: We will, as a matter of fact we�re going to be talking about it shortly. Gentlemen, thank you very much. Darin, David, a pleasure and Michelle we�ll see you again in just a second.
Darin Richards: Thank you.
David Riley: Thank you.
---
Need Help Downloading?
If you're having difficulty downloading or viewing one of our video or audio files, try right-clicking on the link and selecting "Save Link As...". Choose a destination on your hard drive to manually download the video or audio file, then once your download is complete, open the video or sound clip in your favorite media player.
|
CPAs
Disclaimers and Privacy Policy