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Pros Say: Market Correction a ‘Necessary Pause’

Published: Thursday, 14 May 2009 | 12:13 PM ET

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By: JeeYeon Park
CNBC News Associate

Stocks rose on Thursday, snapping a two-day losing streak, as investors gave techs another go and Wal-Mart [WMT Loading... () ] hit its earnings target. However, some economic reports that missed expectations curbed gains. Experts weighed in on the markets, the commercial real estate, and more...

Sluggish Recovery Expected

The economy is nearing a bottoming process, said Jay Bryson of Wachovia Corporation. He says the recovery probably will not be ‘V-shaped,’ but a sluggish process that may last into 2010.

Market Correction a ‘Necessary Pause’

The markets are in the “midst of a moderate correction,” said Peter Canelo of Argus Institutional Partners. He said the markets could lose 10 to 12 percent, but it’s a “necessary pause.” He expects a broader leadership in tech and industrials when the markets come back up.

US Now as Risky as Emerging Markets

The risks of investing in the U.S. seem as high as those for investing in certain emerging markets, particularly in the short term, said Paul Ramscar of Tyche.

AIG Should Rebuild Reputation

Former CEO of AIG Maurice Hank Greenberg was critical of current CEO Ed Liddy’s decision to breakdown AIG [AIG Loading... () ]. “You can’t sell major companies in this market and get anything at fair value,” he said. Greenberg said it is better to rebuild the company’s reputation, even if it will take a longer time.

Gov’t Involvement for Insurance Companies?

Rep. Paul Kanjorski, (D-Penn.), of House Financial Services Committee, said federal government must play a role in overseeing insurance companies. The current economic crisis and what happened with AIG shows the need to rework insurance regulations, he said.

We’ve Avoided the Commercial Real Estate ‘Black Hole’

Robert Maguire or Maguire Investments said there are some encouraging signs in the commercial real estate market. “We’ve managed to avoid the black hole, but it’s going to be a long period,” he said. He said government programs such as the TALF will be opportunistic for lenders.

Commercial Real Estate Will Get ‘Significantly Worse’

In the meantime, Philip Blumberg of Blumberg Capital Partners said the commercial real estate is “beginning to get significantly worse.”

With $70-100 billion worth of unrefinanceable commercial mortgage-backed securities and about a trillion dollars worth of loans due in the next three years, Blumberg said he expects another blow in the banking industry. “We’ve just seen the tip of the iceberg,” he said.

More Agony in the Auto Sector

Mike Englund of Action Economics said there’s going to be "substantial disruptions from the vehicle sector" in the near term due to Chrysler and General Motor's [GM Loading... () ] crisis. “I think it will be similar to what we saw in January when the plant shut downs around the holiday periods were extended to January,” he said.