In cnbc.com’s exclusive OUTLOOK '07 series, Ritholtz spoke with CNBC’s Tyler Mathisen about retail and job trends, the U.S. dollar and why housing will not follow dot-com’s example in 2007.
Ritholtz grabbed the whole U.S. economy by the horns, musing that its current cycle is “unusual”: He pointed out that inflation is higher than the period’s average – yet job creation is lower. He opines that it’s “too glib to say” that all the jobs being created are merely “burger flippers and Wal-Mart greeters” – but nonetheless, the new jobs generally pay less than employment seekers are hoping.
Offering the “full disclosure” that “we own some of the homebuilders,” Ritholtz points out that consumers have drawn heavily off their home equity – and that source of liquidity is drying up. He says, “I expect softness in homes [sales] to impact other [sectors].” But he maintains that there will be the vaunted “soft landing” in housing, which he praises for having “intrinsic value” – unlike the Internet companies before 2000-2001: “the dot-coms’ only assets were a sock puppet,” Ritholtz jokes.
Despite criticism from some circles of a falling U.S. dollar, Ritholtz notes the advantages he says the falling greenback gives to the investor class. The weak dollar helps buoy up value of firms with “big multinational exposure,” the analyst says, specifying McDonald’s, Coca-Cola,PepsiCo andHoneywell International.
Ritholz isn't necessarily recommending any of these stocks, but in the name of full disclosure, he does own Honeywell.