Markets rallied on Monday after encouraging existing-home sales data and comments from St. Louis Fed President James Bullard pointed to ongoing low rates. Is the rally sustainable—and if so, where should investors be putting their money? Stephen Wood, chief market strategist at Russell Investments, and Peter Boockvar, equity strategist at Miller Tabak, shared their insights.
“I’m not a huge dollar bear, but you can’t make a strong argument for the dollar rallying in the near to medium term,” Wood told CNBC.
“The Fed is going to be very proactively easing and that will continue well into the end of next year—perhaps a 2011 phenomenon. So right now, I don’t know that you have a lot of additional weakness, but it’s not a strong rally story for the greenback.”
Wood believes the world economy is stabilizing and said investors should look at the global risk trade.
“As the global growth trade really begins to solidify, investors are going to take some strategic long-term investment points and I think the rally could have some legs in 2010,” he said.
In the meantime, Boockvar said he is bullish on the reflation trade.
“Last week was a short-term turn in that trade with Bernanke talking about the dollar. Taiwan, South Korea, Indonesia all stepped up and said that they don’t like the weak dollar," he said. "Last week’s news in the short term could put a bottom in the dollar."
"Long-term, I’m very bullish on the reflation trade; but in the next 3 to 6 months, the dollar is going to find a bid, but it’s more of a counter-trend rally in this long-term decline,” he said.
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No immediate information was available for Boockvar or Wood.