"Market Monitor"-Eugene Peroni, Senior Managing Director at Claymore Advisors
Friday, June 16, 2006PAUL KANGAS: My guest market monitor this week is Eugene Peroni, senior managing director at Claymore Advisors and welcome back to NIGHTLY BUSINESS REPORT, Gene.
EUGENE PERONI, JR., SR. MANAGING DIRECTOR, CLAYMORE ADVISORS: Thanks, Paul it is nice to be back.
KANGAS: In your many years of experience on Wall Street can you recall a week as wild and woolly as the one that we`ve just completed?
PERONI: Well, I have seen some pretty dramatic rallies and some pretty
terrible declines but not all compressed into one week. So no, I can`t recall anything quite like this.
KANGAS: Well, the unrelenting sell-off in May and early June finally lead to the massive rally of the last two days. Which move do you think was overdone the most or were they overdone at all?
PERONI: I think the decline was the one that was most overdone. It was triggered in May by that April CPI number which really has the market reacting to a stale economic report, a thing that happened 30 days prior. So I`m always a little suspect of a market that is reacting to old news. I`m looking for indications of what the market sees going forward. And I think that the elasticity that we have seen this week is encouraging about the longer-term outlook.
KANGAS: What is at the core of the extreme volatility we are seeing? Is it derivatives, hedge funds, what is it?
PERONI: It is a confluence of things. Sure, it`s the hedge funds and derivatives and so on, but I think it is a market that perhaps was caught a little bit by surprise, seemingly by surprise, by this inflation data, worries about what the Fed might do, certainly the untried results of what the new Fed chairman might do. All these things, I think, played in and created more of an emotional swell. And so whenever you have uncertainty and confusion, you are apt to get this kind of volatility. So I think that it`s more or less of a transient thing, not saying it is going to be here to stay for a long time.
KANGAS: But you would agree that it makes it difficult for the individual investor to make well reasoned decisions?
PERONI: Well, I think in many cases, the individual investor might be best just staying put in good quality stocks, the stocks that have exhibited good leadership since the market bottom in 2002.
KANGAS: On your last visit with us in late January of this year, you recommended the purchase of four stocks. Let`s see how they have done since then. Cleveland cliffs went over one, it looked like, down 37 percent. Intuitive Surgical had a big rise just before you recommended it. Do you still like these two? Are you still with them?
PERONI: Yes, on Intuitive Surgical, I think if they are willing to understand it is a volatile stock, I believe the long-term upside in that is very attractive.
KANGAS: And Cliffs you are out of it, are you?
PERONI: We do hold that in a unit investment trust. In our actively managed portfolios we are out.
KANGAS: You had two others that you recommended. And unfortunately, they are both down. I can`t recall a time when you have had more losers and no winners. But you still like Nordstrom and Monsanto?
PERONI: Right, these were brought in the last appearance, really with the expectation that they are to be looked at as longer-term performers and I do believe that they will perform well over a long term. Nordstrom is a retail stock. I still like the retail. I think the consumer discretionary leadership is still intact in the market.
KANGAS: Let`s get on some new and fresh ideas right now on the buy side, I assume you seem to be bullish. There we see Alliance Data Systems (ADS). It has had a big ride already, but you still like it?
PERONI: I do. And again I think that this argues for the consumer discretionary opportunity going forward in the market. KANGAS: Next one, let`s move on to something else.
PERONI: Astra Zeneca, in the pharmaceutical group.
KANGAS: The big Swiss pharmaceutical. They`ve done well and they are pretty well-positioned, I`m told.
PERONI: Yes, and I do like the health care group here. I like the pharmaceuticals, even the big pharmaceuticals I think longer-term will do well.
KANGAS: OK. I see your next choice is Boeing.
PERONI: Yes, Boeing certainly is attractive in itself. It does represent of course the blue chips. I still think this is a multi-cap market, so I don`t think this is a market that is going just to the large caps.
KANGAS: We just have 30 seconds, one quick suggestion, one more.
PERONI: Well, I also like Corrections Corp. of America. This is a company that has privatized prisons and so on. I think that this represents a good growth opportunity.
KANGAS: Do you personally own any of the securities you have been talking about here, Gene?
PERONI: I don`t but they are held in our summer growth portfolio.
KANGAS: All right. I am afraid our time is up. But Gene I want to thank you for being with us again.
PERONI: It is a pleasure, Paul, thank you.
KANGAS: My guest, Gene Peroni of Claymore Advisors.
