Here’s What Professionals are Saying About Markets Near All-Time Highs
As markets flirt with new all-time highs, we caught up with Cheryl Cassone at Fox Business Network who has been getting some reactions from professionals:
1) We’re currently hitting 5-year highs on the Dow, and we’re within spitting distance of all-time highs. Any thoughts?
There seems to be some technical resistance to closing above 14k on the Dow and that magic mark of 1500 on the S&P. I think there are a few things that are keeping us on hold. On the positive side, we’re seeing a big rotation from bonds to dividend paying stocks, and several analysts have told me that stocks are relatively cheap compared to bonds. The debt ceiling debate and sequestration seems to be a non-issue. Investors are saying that they’re going to buy into the stock markets no matter what. Interest rates are incredibly low right now, and it seems like investors are willing to chase those returns. Even if the Fed decided to make a move upwards next year, I think we’ll be out of the woods by then. Beware of short term pullbacks, and try not to let them worry you.
2) What’s the sentiment on the exchange floors?
Traders are getting back to business, which they haven’t been able to do for a long time. From the election to the fiscal cliff, the Consumer Financial Protection Bureau, or Dodd-Frank, the list of major obstacles is finally dwindling. I just hope that the rhetoric of attacking business calms down in the next four years of this administration. To put it bluntly, DC needs to understand that words hurt. Traders are still sensitive and would have no problem selling given the opportunity…
3) Why do you think reactions are like this?
You can’t blame investors, traders, small business owners, and CEOs for their nervousness. Why would we suddenly just brush off the cobwebs and take the Dow and the S&P to multi-year highs with one eye open? I’ve had a few sources mention a potential pullback in February, but it could be a simple reaction to January’s strong gains, and there’s nothing wrong with booking profits. I’m sure everyone has a larger savings account than they did in 2008.
4) Which areas would you consider to be the strongest?
I have several contacts in the commercial real estate and residential real estate sectors, and those are the areas that I’m watching carefully right now. We’re seeing the lowest inventory for existing homes in decades, and that tells my sources that if you liked the housing recovery of 2012, you’re going to love 2013. On the commercial side, things have slowed down a bit, but overall we should see some of those empty strip malls throughout the nation begin to fill up once again — probably in the second half of 2013.
Cheryl Cassone is an anchor at Fox Business Network.