"Market Monitor"-Elaine Garzarelli, President of Garzarelli Capital
Friday, October 06, 2006PAUL KANGAS: My guest "market monitor" this week is Elaine Garzarelli, president of Garzarelli Capital and welcome back to NIGHTLY BUSINESS REPORT Elaine. Good to see you.
ELAINE GARZARELLI, PRESIDENT, GARZARELLI CAPITAL: Nice to see you.
KANGAS: On your last visit with us in early March, you said that Wall Street was in a major bull market and you predicted that the Dow Industrial Average would reach a new record high within 12 months. Well, it did it this week in only seven months, so I compliment you on a great call.
GARZARELLI: Thank you.
KANGAS: You also predicted the Standard & Poor`s 500 Index would set a new record and it hasn`t. But do you still expect it any time soon?
GARZARELLI: Well, yeah. It is about 12 percent away from an all-time high. And I think that will happen sometime in the next 12 months.
KANGAS: Are you somewhat concerned that there hasn`t been a complete confirmation by other averages for the Dow`s new high? GARZARELLI: Well, not by the NASDAQ, but the transports, the utilities, the S&P 600, the Russell 2000, the Amex, they all reached new highs earlier in `06. So the Dow was lagging and the S&P is lagging. I think they`ll all reach new highs again, except for the NASDAQ. That needs a 50 percent gain.
KANGAS: That needs quit a move. Where do your 14 market indicators stand currently?
GARZARELLI: They stand at a bullish reading of 48 percent.
KANGAS: They were 46 when you were with us in early March. That is bullish too.
GARZARELLI: Yes, it was. And then they went to a correction signal in May and we had a 7.7 percent correction in the S&P, 15 percent in the NASDAQ.
KANGAS: Right.
GARZARELLI: . which ended June 13th. And we`re now in another phase of the bull market.
KANGAS: What are your thoughts on the weak September employment report that was out today?
GARZARELLI: Well, with the revisions, it really wasn`t so weak. Actually it was stronger than expected. So there is some fear that the Fed may not ease as soon as the markets had expected. I don`t think that is the case.
KANGAS: Is the Fed through hiking rates once and for all? Is that it for this cycle?
GARZARELLI: I think so. And even if they did raise rates one more time, it wouldn`t change our outlook.
KANGAS: What about the housing industry? Where do you stand on that?
GARZARELLI: I think it`s pretty much bottomed here because the mortgage rate is down a full percent from its high and that should stabilize the housing industry.
KANGAS: How about oil prices? Do you think they will stay between $55 and $65 per barrel?
GARZARELLI: I do because I see the economy slowing not only here inthe U.S., but around the world. And that is the major reason I think oil prices were so high before. So I think they will stabilize.
KANGAS: That`s good news to hear. In early March, you recommended the purchase of four securities. Let`s see how they have done since then. The first two, industrial select spider over in the American up 4.5 percent. Motorola did well, up 16.7 percent, good call. Still with those two?
GARZARELLI: Yes, I am.
KANGAS: OK. The other two Oracle, look at that gain, 42.2 percent. That was a great call. And Dupont has done well up almost 10 percent, all winners. Very nice, Elaine. I compliment you.
GARZARELLI: Thank you. Three times better than the S&P. So that was a good week.
KANGAS: Very good indeed. How about some new recommendations for our viewers?
GARZARELLI: OK. First one is Dow Chemical. I think the chemicals are ready to take off because oil prices have come down. Dow is down 17 percent just in the last 12 months.
KANGAS: We can see that on the chart, yeah.
GARZARELLI: OK, the next one is Intel. And I think capital spending will lead the way in the economy -- with the economy in `07.
KANGAS: That one is --
GARZARELLI: That stock is down 73 percent from its all-time high, 25 percent just in the last year.
KANGAS: We have a minute left and time for a couple more maybe. Let`s try.
GARZARELLI: OK, good, Hovnanian is a home builder down 60 percent and that is a New Jersey-based company. And the last one is the old Philip Morris and that is Altria with a dividend yield.
KANGAS: I was going to say, nice dividend. Everybody likes it with the dividend.
GARZARELLI: Exactly. KANGAS: All right, we will have to see how these stocks fair in the coming months. Any last thoughts for our viewers? We have about 20 seconds.
GARZARELLI: Yeah, no, I`m very bullish on the economy. It`s the best economy I have seen in my career, even though I know it sounds strange with the budget deficit down to 1 percent of GDP and the international deficit is getting better too.
KANGAS: I meant to ask you also, do you personally own any of the securities you recommended tonight?
GARZARELLI: Yes, I do.
KANGAS: OK, you own them all. OK, very good. Elaine as always, I thank you for being with us.
GARZARELLI: Nice being here. Thank you.
KANGAS: My guest, Elaine Garzarelli of Garzarelli Capital.
