Recovery Will be W-Shaped in Short Term: Expert
Dean Curnutt, president of Macro Risk Advisors and Alec Young, equity strategist at Standard & Poor’s said they are remaining cautious in the near-term.
“People want to see if last week's pullback holds,” Young told CNBC.
“I think we’re going to break here and enter into a full-blown correction…I think [the recovery is] going to be weaker than expected and that’s going to lead analysts to start cutting 2010 earnings expectations. ”
He said the risk-reward for stocks isn’t as compelling as it was a couple of months ago and told investors that there is not a lot to play in the stock market. (Watch the video for the full interview...)
Curnutt said that continued weakness in jobs is a concern, market forecasts are too optimistic and the rally will ultimately fail.
“I see a ‘W-shaped’ recovery in the short term,” he said.
As a long-term investment strategy, Curnutt advised investors to consider put options on the S&P 500 and gold .
“Put options on the S&P 500 are fundamentally cheap,” he said. “[And] we think the price of owning gold in the options market is really under-priced…If [gold] moves, it’s going to move very quickly to the upside.”
No immediate information was available for Curnutt or Young.