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Market Vigilantes to Cause 'Major Headwind': Strategist

Monday, 28 Feb 2011 | 11:28 AM ET

There are three types of issues that are going to produce some “major headwinds” in the markets going forward, said David Dietze, president and chief investment strategist at Point View Financial Services.

Final Trading Day of February
Where to invest in March, with David Dietze, Point View Financial Services, and Drew Kanaly, Kanaly Trust Company.

The three things to watch for are bond vigilantes, commodity vigilantes and taxpayer vigilantes, Dietze told CNBC.

“We seen interest rates move up since the fall and central banks around the world are beginning to pull back the punch bowl,” Dietze explained, using the colloquialism for stimulus money and low interest rates.

“Commodities have also been on a tear.”

“The next move is less spending by state, local and federal governments; and there’s no way less spending in the near-term — given that the government is the largest 'consumers' in this country — [can be read] into a positive case for the stock market,” he added.

So how can investors prepare themselves going forward? Dietze suggested health care and utilities.

A Rosier View:

In the meantime, Andrew Kanaly, chairman of Kanaly Trust Company, had a more positive outlook on the markets.

“You’re still seeing very amazing corporate profitability—especially in the domestic market, we still like the IWF [ETF] for growth stocks,” said Kanaly.

“We’re still in very good shape for the next 6 to 9 months,” he said.

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Scorecard—What They Said:

  • Dietze's Previous Appearance on CNBC (Feb. 25, 2011)
  • Kanaly's Previous Appearance on CNBC (Feb. 11, 2011)

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More Market Intelligence:

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CNBC Data Pages:

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CNBC Slideshows:

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Monday's Top Dow Gainers (as of this writing):

Pfizer

Hewlett Packard

Disney

3M

Bank of America

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Disclosures:

No immediate information was available for Dietze or Kanaly.

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Disclaimer

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DIS
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HPQ
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IWF
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MMM
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PFE
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