Most market participants expect the Federal Reserve to resume buying assets, and do so in a sizeable way, according to a CNBC survey. How would the move affect markets? Jim Lacamp, portfolio manager at Macropotfolio Advisors, and Craig Peckham, managing director and equity product strategist at Jefferies, shared their outlooks.
“In the near-term, it means there’s more booze in the punchbowl—people are still doing shots at the party and the market goes higher, but there’s going to be a massive hangover,” Lacamp told CNBC.
Lacamp noted that input costs such as copper, tin, base metals and general commodity pricesare all rising and producers will eventually have to decide whether to pass the burden onto consumers, which would be considered inflationary, or to “eat it up,” which would lead to a deflationary environment.
“We’re a 70-percent consumer-driven economy, so we’re driving up prices for consumers to help the 14 percent of our economy that’s manufacturers—it doesn’t make any sense at all,” he said.
In the meantime, Peckham said he likes the hard asset plays.
“In particular, we like gold stocks,” he suggested. “The thesis continues to be predicated upon not just quantitative easing, but more broadly central bank demand for the asset, which will provide a tailwind and move the U.S. dollar base price of the commodity higher.”
Peckham Likes:
Agco
Cavium Networks
Nu Skin Enterprise
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Scorecard—What They Said:
- Lacamp's Previous Appearance on CNBC (Oct. 4, 2010)
- Peckham's Previous Appearance on CNBC (Oct. 4, 2010)
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More Market Analysis:
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CNBC Data Pages:
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CNBC Slideshows:
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Earnings Coming Up:
Intel
JPMorgan
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Disclosures:
No immediate information was available for Lacamp or Peckham.
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