The Fed is expected to make an announcement on quantitative easing—buying more bonds to increase the money supply—a week from today. Sentiment is now shifting the stimulus won’t be as much as previously expected. So, what does that mean for investors? Jim Meyer, CIO and co-founder of Tower Bridge Advisors and Jim Iuorio, director at TJM Institutional Services shared their insights.
“Buy the dollar between now and next week and I think the yield curve is going to steepen,” Iuorio told CNBC. “Next week, if the election comes out well, the stock market is going to be supported a little bit by the notion of more conservative government coming in.”
Iuorio told investors to take a look at bank stocks because the sector will benefit the most from a steep yield curve.
“They make money the old fashion way by borrowing short and lending long and that’s why the banks are hanging a little better today against some of the other sectors,” he explained.
In the meantime, Meyer said he is staying “fairly defensive” and the market is getting at the high end of the range.
“I don’t even know if QE 2 works,” he said. “I would opt for going lighter for a while before going real big time.”
ProShares UltraSh20+ Treas.
Scorecard—What They Said:
- Iuorio's Previous Appearance on CNBC (Oct. 26, 2010)
- Meyer's Previous Appearance on CNBC (Oct. 11, 2010)
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No immediate information was available for Iuorio or Meyer.