This morning, M & A activity and the hope that The Fed will stay on hold tomorrow pushed up stocks, though modestly.
On “Morning Call” Liz Claman discussed the market’s current strengths and weaknesses with Nick Raich, Director Of Research at National City Private Client Group and Stephen Wood--who is Portfolio Strategist At Russell Investment Group.
Nick Raich said the market has been going straight up since mid-July, really mid-June when then--it bottomed. The market has been pricing in a soft landing and a profit growth of 10% next year. In this environment, Raich said, he likes to overweight sectors that he thinks are cheap on a relative basis. He said he likes industrials--that are beaten down--and financials.
Stephen Wood said "..when it comes to the Santa Claus Rally, I don't know if he's going to arrive by December 25th- but if he comes by the first quarter of '07, that will be pretty consistent with history. We want to be more more stock specific - that means the names within the sector are more important than making a bet on the sector as a whole."
Wood also said earnings are going to slowdown in 2007 - but that comes off the third of 3 fantastic years. He said we're in the 6th year of a screaming "value bull market" and he thinks that larger cap stocks and growth stocks looks poised for 2007.