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Pros Say: Expect 3 More Years of Volatility

Stocks opened higher on Wednesday as oil prices jumped above $71 and Home Depot raised its outlook. Banks opened mixed as the market digested news that some of the largest institutions would be repaying government bailout money. Some investors worried that the 10 banks returning TARP money could be doing so too soon and might need further injections later. Read and listen to what experts had to say…

3 More Years of Market Volatility

“What you need to do is still focus on quality stocks,” said William Skeean of Edge Capital Partners. “Given the fact that [the U.S.] is facing higher inflation…and potentially higher taxes,” investors should prepare for volatility in the marketsover the next three years, he said.

US Bond Market Signals Recovery

“The main reason why [U.S. bond yields] are shooting up is because government bond markets around the world are beginning to factor in the prospect of a recovery,” said Mike Lenhoff of Brewin Dolphin Securities.

Economy in Eye of the Hurricane

According to Simon Rose of Dahlman Rose, the economy is in “the eye of the hurricane.” “We’ve thrown a wall of capital against the problem and unfortunately we’re going to have to pay it back at some point,” he said. While the economy has seen positive effects of the global stimulus, he is worried about inflation and rising interest rates, which will mute the recovery.

Expect Overseas Recovery By Year-End

We’re seeing signs of recovery in the short-term, but there are questions of how strong it may be in terms of job creation and consumer spending, said Bruce McCain of Key Private Bank. He said there will be signs of recovery overseas by year-endwhich should help with overall economic growth.

Markets Entering a ‘Danger Zone’

“I’m constantly shocked at how many investors worship at the altar of price momentum,” said Doug Kass of Seabreeze Partners Management. He said the markets are entering a “danger zone” and the increased likelihood of a double dip in early 2010 in the domestic economy is a concern.

For Oil, The Sky’s the Limit

Crude oil prices recently reached a new high for the year and could get even higher, said independent oil trader Daniel Dicker. “Instead of fundamental reasons for oil to be going higher, there’s a fundamental argument to invest in oil — and that’s what’s driving oil higher,” he said.

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