US stocks were higher Thursday after encouraging readings on jobless claims and the trade deficit. Should you buy this rally? Sarat Sethi, partner and portfolio manager at Douglas C. Lane & Associates, and John Merrill, founder and CIO of Tanglewood Wealth Management, shared their insights.
“We need catalysts to release the animal spirits and get some of those trillion dollars in reserves off the bank balance sheets,” Merrill told CNBC.
Merrill said the catalysts include housing and the mid-term elections.
“The cost of buying a home is exceptionally low today, and so we think that as soon as others recognize that we’ve reached a bottom in housing prices, we think that sales could catch fire from there,” Merrill said.
Sethi's View:
In the meantime, Sethi said he anticipates slow growth in the economy.
“[Growth] is not exponential and what we see in the market is that this is the time where there’s some really high quality companies we can buy into—great margins, great dividends, great balance sheets—and really create a diversified portfolio with a bunch of stocks that we haven’t been able to buy in the last decade, that not only have exposure to the U.S. but all across emerging markets,” he said.
In particular, Sethi favors the semiconductors names such as Linear Technology and consumer staple stocks such as Nestle and Unilever .
______________________________
Scorecard—What They Said:
- Merrill's Previous Appearance on CNBC (Jul. 2, 2010)
- Sethi's Previous Appearance on CNBC (Jul. 19, 2010)
______________________________
More Market Intelligence:
______________________________
CNBC Slideshows:
______________________________
CNBC Data Pages:
______________________________
______________________________
Thursday's Top Dow Gainers (as of this writing):
Bank of America
JPMorgan Chase
American Express
Johnson & Johnson
General Electric
______________________________
Disclosures:
No immediate information was available for Merrill or Sethi.
______________________________