The CBOE Volatility Index (VIX), also known as the “Investor Fear Gauge," hit a 19 month low on Friday. What does it all mean for stocks and investments going forward? Hank Smith, chief investment officer of Haverford Investments, and Mike Rubino, president of Rubino Financial, discussed their market analyses. (See their recommendations, below.)
“The real thing that’s driving the economy is the deleveraging of the debt in housing markets that continues,” Rubino told CNBC.
“Defaults continue to rise in an improving economy…We expect another round of defaults in the middle of this year in the late summer.”
As a result, Rubino said the U.S. could “certainly” see a double-dip in the economy.
“Our strategy is to be awfully cautious at this point,” he advised.
“The market could continue to eke its way higher but there are so many issues in regards to deleverging that it doesn’t matter how much money [the government] spends, the deleveraging dwarfs the amount of money that they could and would possibly spend.”
“We think that the government should let the process run its course and we’ll be better as a result of it,” Rubino added. “The government can’t fix anything.”
Smith Sees Bull Market
In the meantime, Smith said we are currently in a bull market, fed by a globally synchronized recovery.
“The Fed could raise rates—they could raise it by quarter point hikes or even throw in a half a point hike and you’re still going to have an extraordinarily accommodative policy from the Fed,” he said. “So the Fed has a long way to go even before you get to neutral.”
Smith Likes:
Walt Disney
IBM
Coca-Cola
PepsiCo
McDonald’s
Johnson & Johnson
Abbott Labs
P&G
Rubino Likes:
PowerShares DB USD Bull
Technology SPDR
SPDR S&P 500
Another Counterpoint View:
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More Investing Opinions:
- Be Long US Banks: Equity Strategist
- Investing With Cheap Dollars Still a Good Trade—For Now
- Higher Rates Could 'Wreak Havoc' on Rally: Strategist
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CNBC Slideshows:
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CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Track the VIX Here
- Where's the US Dollar Today?
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Disclosures:
No immediate information was available for Rubino or Smith.
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