Stocks opened flat on Wednesday as investors weighed a tame inflation reading against a drop in mortgage applications and weaker-than-expected outlook from FedEx. Consumer prices rose just 0.1 percent in May, despite the rise in gasoline prices, after a flat reading in April. Over the past 12 months, prices have fallen by 1.3 percent, the most since 1950, the Labor Department reported. Read and listen to what the experts had to say…
‘Bumpy’ Recovery Ahead
“A bumpy recovery is probably the most likely scenario,” said Yvan Mamalet of Societe Generale Asset Management. He said that while there is an ongoing recovery, “in order to sustain a 'V-shaped' recovery, the economy would need to see sharp rises in consumer spending and investment in late 2009 and early 2010.”
Road to Recovery Will Be Slow
The road to recovery for the economy and the markets “will be a slow slog,”says Stuart Schweitzer, global markets strategist of JPMorgan Private Bank. “We still have the same consumer debt burden,” he said. “The only growth that we’re getting is the growth from companies that have to restart production lines.”
- Art Cashin: Expect 'Long, Tough' Slog
Market Correction Began in Early May
The correction actually began in early May and everything has flipped since May 6th, said Peter Canelo of Argus Institutional Partners. “The defensive stocks except telecom stocks have done better and all of the economically sensitive stocks have come down a bit led by financials, this is only going to make it a bit difficult for financials.” He expects better numbers in the summer months.
A New Reserve Currency?
Emmanuel Ng of OCBC Bank said BRIC communiqué did not mention the dollar or another reserve currency. “At the very least, there were no dollar-bashing comments,” he said. “So in the near term, the weakness of the dollar will be alleviated to a certain extent.” In the case of a new reserve currency, the most visible candidate would be the SDR, he said.