Koesterich said according to the lean economic indicators, the uneven economy will continue for the next one to two quarters. Koesterich predicts 2-2 1/2 percent GDP for the second and third quarters, due to the run-up in commodity prices in 2010 and slowdown in fiscal stimulus in the past 6-8 months.
The "debt crisis" may also have an effect on the third and fourth quarters, depending on how the crisis is handled.
“Right now, it doesn’t appear like we are seeing any real short-term cuts—unless we come up with a more definitive solution than it looks like we’re likely to get—then this doesn’t become as much of an issue for the market until after the 2012 election, where we start to get some clarity about how we are going to address the debt situation.”
Koesterich said defensive big-cap dividend-paying stocks looks cheap:
”If you think about the last couple years you’ve had this rally that mostly favored risky assets. As a result, mega-cap companies are actually cheap.”
Koesterich also said to look at the S&P to find value in stocks.
“If you look at the stocks in the S&P 100 they’re trading at about a 5-10 percent discount to the S&P 500, and they’re much cheaper then small caps, so you actually get some good value right now.”
Koesterich is recommending these investment areas:
(sector space/corresponding iShares ETF)
Global S&P 100
CNBC Data Pages:
Disclosure information was not available for Russ Koesterich or his company.