The investment world is starting to crystallize into conviction bulls and bears. Buckle up: that means more volatility.
Our guests on the show this morning played both sides. Robin Griffiths charted the recent falls on the FTSE -- but pointedly said we have failed so far to meaningfully retest lows for the year. If we get back there he says it is critical that those levels hold. He believes they will be, and thinks any rebound from a sub-6,000 number would indicate a new bull run.
Where is the bear asks Robin? Looking at India shows an index still untroubled by the sub-prime related sell-off we have seen in western markets. In effect, we are seeing a credit related discount coming into western markets which Robin thinks could be overdone.
Where is he looking for value? Japan's further declines are making the technical picture compelling, he thinks. Interestingly, another story doing the rounds today suggests that hedge funds have finally thrown in the towel over Japan. Contra-indicator?
Philip Manduca, our guest host, described himself as less interested in stocks than the 'bigger' opportunity in gold and oil. He has previously called a $100 a barrel oil and gold at $1,000. He is negative on the macro story for stocks believing that slowing global economic growth can only bring weaker corporate earnings. China is not slowing, inflation is rising and central banks are struggling to control the money supply.
Manduca says the key for developed-market growth lies with employment. The debt in Anglo-Saxon economies will strangle the consumer if unemployment starts to rise. Jobless people can't pay off their bills.
We are playing a special "Squawk Outside the Box" on Tuesday night presenting a bull and bear case. You can catch it on the Web site if you miss the first airing.
Personally I am getting interested again in alternative energy companies. I was just in Sacramento recording a show on climate change and whether California will adopt a carbon trading scheme. Solar panel fitters in the state tell me they are only able to source half the demand they are experiencing. Prices have to go up or new companies need to come into the space. Either way, there is further promise in the sector.
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