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What: Discussion of whether or not the market has hit a bottom.
Where: CNBC's Market Mavens
When: July 31st, 2008
Who: CNBC's Sue Herera, Darin Richards (AKT Wealth Advisors), Bruce Levis (Rydex Investments), and a CNBC Co-Host
Jim Cramer: Bottom line: Yes I called the bottom! I have not brought out the Bear Meat Slicer in maybe a year and a half. I’m really feeling better after this second-day rally. A two-day winning streak in this market is about as rare as a condor on Wall Street! Not to mention the fact that the oils and the techs and the banks all rallied at once today”¦we haven’t seen that—it happened once in this miserable year!
Sue Herera: Alright let’s talk with our Mavens and see what they think on this. Joining us now is Darin Richards, Chief Investment Officer at AKT Wealth Advisors and Bruce Levis, Managing Director at McQueen Ball & Associates. Darin, I’m going to start with you because you were one of the first people that flagged the subprime credit crisis to us, and that was way before anybody else on the street back in March. But you say now you’re feeling more optimistic than you have in quite some time. Why?
Darin Richards: Yeah I am Sue. Not quite as much as Jim Cramer but—
Sue Herera: That’s ok, very few are!
Darin Richards: Yeah it’s hard to do that isn’t it? There’s a couple of signs out there that we’re seeing that indicate maybe we’re getting closer to the bottom than we’ve been in a while. And the rate of home price decline on the K-Shiller is down below 1: month-to-month, which I think is a positive versus 2: which it was several months ago. Consumer confidence improved a little bit, which I think again it came off a 28-year low. And we’re just kind of overall looking at the market. You’re seeing companies that have positive earnings being rewarded and companies that have negative earnings being punished and that’s the way the market should operate when things are normal and not so much focused on the macroeconomic factors and the fear factors.
Sue Herera: Ok, Bruce, do you think we’re at or near a bottom or no?
Bruce Levis: I think we got a little ways to go yet. There’s a couple more pieces I think need to kind of fall into place. Certainly we need to get some repairing of the credit markets. It’s a pretty restrictive environment right now in terms of credit and credit generation. So we need to see some of that kind of get behind us—a little more of that behind us. And we do need to see a little more stabilization in the house prices and we need to also burn off some of that inventory in the housing market as well.
CNBC Host: Darin, you know the first two weeks of this month, S&P500 down 5%. Last two weeks of the month, up almost 6%. The SPDR financials’ even more volatile: down 15% then up 27%. Is the volatility over?
Darin Richards: I think its certainly declining, and you’re starting to see people focused on earnings and not so much on the fear factor out there but the one thing that we noted the other day is that there is a ton of cash right now on the sidelines and I think you’re going to see that start to pour in when we start to see some positive news and really provide some support for the market. I really don’t see much more downside risk. I think there’s more upside potential and I think the market’s starting to realize that.
CNBC Host: Hey Bruce, you like Healthcare and Consumer Staples. How come you don’t like Tech?
Bruce Levis: We just really want to emphasize more of the Healthcare names in this sort of environment rather than the Tech names. There are some Tech names out there that are interesting, I just have to see that the two top sectors that we’re interested in right now”¦
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