The Federal Reserve's move to hike the discount rate worried investors, who fear the end of a low-rate era. However, David Darst, chief investment strategist at Morgan Stanley Smith Barney, said this is a “glass-is-half-full situation.”
“The market was worried that China was in a bubble, they thought the U.S. dollar was falling out of bed, they thought the president was going to go way over to the left and confiscate everything,” Darst told CNBC.
“But he’s taking baby steps towards the center.”
Darst said he is optimistic about the rise in the discount rate.
“To me it says the patient can now get around with the aid of a cane—the patient is out in the sunshine walking around the courtyard of the hospital."
Darst expects earnings to continue to be “very strong” this year and also anticipates positive results from next Friday’s GDP figures.
“We think it’s going to be revised upward from 5.7 to 5.9 on more inventories,” he said.
Darst’s Market Strategy:
Overweight: Asia equities ex-Japan, REITs, commodities
Equal-weight: managed futures funds
Underweight: U.S., Japanese, and European equities
- Watch Darst's Previous Appearance on CNBC (Feb. 11, 2010)
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Disclosures:
No immediate information was available for Darst or his firm.
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