Pros Say: Economy To Go Positive Between Q3 — Q4
Wednesday: Pending sales of existing U.S. homes inched upward but home values keep slipping. Job losses in the U.S. private sector accelerated more than expected in March but planned layoffs are down. Pres. Obama urged unified action at the G20 meeting. Four tiny banks were the first to pay back TARP funds. CNBC heard from experts who said the market will make a major move around Easter — and went overweight in stock portfolio allocation.
Better Data Makes for Stocks Overweighting
Phil Orlando of Federated Investors went into March neutral in his stock-bond allocation (60 percent stocks, 40 percent bonds); the rally prompted him to add 10 percent to stocks. If the data continue to improve, he will keep that overweight.
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Orlando said the key to March's market success was economic data, which became "less bad." If the numbers continue this pattern, it will provide further encouragement. He said he expects the economy to turn positive between the third quarter and the fourth quarter.
'Choppily Sideways' Now; Stormy Summer Ahead?
"Even a blind squirrel finds an acorn once in a while," said Art Cashin of UBS Financial Services. He sees the market continuing to move "choppily sideways," with the next major move likely around Easter. He's concerned that Washington officials, fanning the flames looking for villains and victims, might encourage G20-style protests here in America this summer, particularly if something like a commodity shortage or an oil-price spike comes along to upset things.
Comeback Coming — But No '30-Minute Sitcom' Recovery
Anthony Chan of JP Morgan Private Wealth Management said all early indications point to a dismal jobs report on Friday. What we need most is time: there's been a lot of stimulus, and a lot of change in monetary policy. The turn is coming, but it won't be a "30 minute sitcom recovery." Also, we don't need consumers to change habits too drastically, becoming Chinese-style savers overnight; some consumption is needed to get the economy moving again.
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