As recession fears continue to spread globally, investment banks like Goldman Sachs scramble to survive — and investment gurus alter their tactics and strategies to roll with the damage. CNBC's expert advisors gave their outlooks on what's coming and what to do about it.
Come On In, Investors: The Water's Fine
Mani Govil of RS Investments told The Call the current investment climate is ideal for fundamental, long-term investors, with great values across the board. "Name a sector, and we can find a company with good fundamentals," he said. Highmark Capital's David Goerz agreed, saying stocks have been beaten down to a level that represents a significant discount.
Pharma Sector's Profit Panacea
Deutsche Bank's Barbara Ryan sees several reasons why pharmaceuticals are "driving earnings up," including restructuring, penetration into emerging markets and mergers & acquisitions — especially involving biotech. She offered CNBC three of her top stock picks.
Citigroup Facing Major Transformation
Following reports by CNBC's Charlie Gasparino that as many as 50,000 Citi jobs will be cut, Farr, Miller & Washington's Michael Farr said the old business model is broken and Citigroup will emerge as something new and different: Traditional-spread banking will be a slow-growth business, asset management will continue to be key — and Citigroup must figure out how to re-enter the new investment banking market.
Strategists Like Emerging Markets, Shun Financials (For Now)
Christopher Zook of CAZ Investments told CNBC it's far too early to make any moves into financial stocks; he picked General Motors preferred shares as the ultimate high-risk, high-return investment. Zephyr Management's Jim Awad said the "center of gravity has moved to the emerging markets."
Commodities Cos Better Have Deep Pockets
Small-cap oil and gas companies saw the worst quarterly drop since 2004, according to Ernst & Young's Oil and Gas report. E&Y's Jon Clark broke down the report for CNBC.
Task Force: Big 3 Reforms Essential; Reason For Hope
Anthony Chan, chief economist of JPMorgan Private Wealth Management, said U.S. carmakers cannot be given a blank check; sweeping management reforms are needed first. Frederic Dickson, chief market strategist of D.A. Davidson & Co., said American ingenuity will eventually pull us out of recession, but there's much more rough road ahead first.
Investment Rx: Benefits Managers
Citigroup's Charles Boorady recommended UnitedHealth Group, Wellpoint, and two more PBM companies, saying the upswing in electronic prescriptions and the wider use of generic drugs help drive up their earnings. This, he believes, gives the benefits managers an edge because of the push toward cost containment — likely to get stronger under the Barack Obama administration.
More Cause To Fear Financials
Former Lehman Brothers CFO and Morgan Stanley treasurer Brad Hintz, now an analyst for Sanford C. Bernstein, says the corporate bond market remains in disarray, and the only business the big financial firms are doing is in government securities. Citigroup and JP Morgan Chase are especially vulnerable at this point, with shaky deposit bases.
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