Stock Picker: Bernanke's Reappointment 'Positive' for Markets
CNBC.com Writer
Ben Bernanke’s reappointment as chairman of the Federal Reserve was probably the best move for the markets, said Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds, and Alan Valdes, vice president of Hillard Lyons. (See their stock and sector picks, below.)
“Most market participants wanted the reappointment,” Cuggino told CNBC.
“He’s the ‘devil you know’ with respect to current policy. And his policies of easier money, getting us out of the recession, seeing us through the last 6 to 9 months have been widely accepted by the market.”
However, Cuggino said he has long-term concerns about the Fed’s exit strategy and Bernanke’s fundamental view toward monetary policy.
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“For the moment, the market views it positively. I’ve seen him articulate an exit strategy but we have not seen it happen yet and I think that’s a very valid concern,” he said.
Cuggino said the exit strategy is going to determine how much of a problem inflation will be in the future.
“I like commodities—I think the global growth story has an anti-dollar deflationary play on it and financial services because I expect easy money policies to continue which results in a great yield curve for financial services and banks to earn money,” he said.
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In the meantime, Valdes said the markets would have opened much lower if Bernanke weren’t reappointed.
“We do have good news out of Case-Shiller and consumer confidence but Bernanke at the helm—it’s a good sign for the markets—not only the U.S markets, but also world markets also agree with this decision,” he said.
Valdes expects inflation, but the economy has come a long way compared to the same time last year.
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“You put the fire out in your house first and then you worry about the water damage and that’s what he’s done," he said.
"If you look back to where we were this time last year, markets have come a long way, confidence in the [U.S.] has come a long way and those are things that are undeniable.”
He added the dollar will eventually stabilize, as the economy turns around in the long run.
Cuggino Likes:
BHP Billiton
Freeport-McMoran
Peabody Energy
State Street
Bank of NY Mellon
Gold
Commodities
Valdes Likes:
S&P Financial
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Disclosure:
No immediate information was available for Cuggino or Valdes.
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