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CNBC News Associate
With the prospect of higher unemployment hanging over the markets, some experts expect a correction. So are they right? Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds, and John Lekas, CEO and portfolio manager at Leader Capital, shared their insights. (See their recommendations, below.)
“I think we go below the double dip,” Lekas told CNBC. “By year-end, we drop below 6,300 on the Dow and by 2011, we’re at 4,200.”
Lekas said although Monday's ISM services index was “neutral,” the unemployment number was at 785,000 last month and that number is expected to worsen.
“So 26 to 27 million people who are out of work isn’t going to help the economy,” he said. “And until that number gets better, we will not see a recovery.”
Lekas told investors to sell equities, buy short-term fixed income, stay with high quality names and stay safe.
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In the meantime, Cuggino said although there are risk factors and uncertainty in the markets, earnings are going to continue to improve.
“There’s also a tremendous amount of liquidity out there that will be used to prime economic growth going forward,” he said.
Cuggino recommended sticking with equities—“especially U.S. multinationals who take advantage of worldwide growth.” He also likes the financial services, biotechnology, pharmaceuticals and technology sectors.
More Market Intelligence:
- Art Cashin's Warning: Markets Could 'Crack Like an Egg'
- Financial Stock Picks from a Chief Investor
- Top Traders: Playing Roubini's U-Shaped Recovery
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Recommendations:
Cuggino Likes:
FedEx [FDX
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Hewlett-Packard [HPQ
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Freeport-McMoRan [FCX
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Lekas Likes:
3-Month T-Bill
6-Month T-Bill
2-Yr T-Note
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Disclosure:
No immediate information was available for Cuggino or Lekas.
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