"Street Critique"-Kevin Depew, Executive Editor at MINYANVILLE.COM
Wednesday, March 26, 2008PAUL KANGAS: While tonight's "Street Critique" guest sees some upside potential for stocks over the next six to eight weeks, he's still a long-term bear. He's Kevin Depew, executive editor at the financial commentary web site minyanville.com. And Kevin, welcome back to NBR.
KEVIN DEPEW, EXECUTIVE EDITOR, MINYANVILLE.COM: Thank you, Paul.
KANGAS: Let's talk about this market. We've seen some strong gains and some sharp sell-offs in recent trading sessions. A lot of people are saying we may have hit bottom. What are you seeing in the market that makes you so bearish longer term?
DEPEW: Longer term, if you go back about 10 years, we're right about where we were. So if you'd put money to work in 1998 and you're looking at your portfolio now, you're looking at essentially the same amount. You would have done better with much less risk in Treasuries. So given that fact I think sentiment has gotten a little bit overdone here in the near term. We're good for maybe a 10 percent move over the next six to eight weeks but longer-term, the issues are still with us.
KANGAS: The last time we spoke in mid February, you thought the economy was turning negative. You were right. Now you think we're in a recession. Is that true?
DEPEW: Well, sure. When we look at the data that's coming in, durable goods orders this morning showed capital expenditures by businesses had fallen almost 3 percent, back to back negative months of capital expenditures. Bulla have been touting that as one of the rescues for this economy when you have consumers pulling back, but that's not the case now.
KANGAS: You remember the old axiom on Wall Street. A market that ignores bad news, we've had nothing but bad news, is one destined to go higher. And we're still above 12,000 Dow.
DEPEW: Right, absolutely. I think part of the barrage of bad news has been baked into the pie here. But barring the next six to eight weeks where we're due for a little bit of a rally, all of these debt issues are still going to be with us and it's going to be back to reality by the second half of the year.
KANGAS: With your recession mindset, you liked consumer staples on your last visit with us in mid February. Your picks Sara Lee (SLE) and Fortune Brands (FO) are still trading around the same levels as then. Do you still like them?
DEPEW: I do. I own both of those as well.
KANGAS: You've brought our viewers some more of your so-called recession proof stocks. Tell us about your first pick.
DEPEW: The first pick is Campbell's Soup (CPB). This is the classic recessionary stock. What do people do when the economy turns negative? They trade down. Soup is one of the first items that start showing up on the shopping lists when you go out to protect yourself from a recession. So I think this company is one that stands to benefit this year.
KANGAS: OK. We have time for another pick.
DEPEW: Wal-Mart (WMT). Wal-Mart is another classic store where people will start trading down from even Target to Wal Mart and a lot of folks' opinions is a trade down. So I think that this is a company that they've streamlined, trimmed away some of the luxury goods they were trying to sell over a year ago. They're a little bit more, they're ready for a recession. I think that's a stock that benefits.
KANGAS: And you're well prepared to ride one out with stocks like that that are rather defensive in nature. Correct?
DEPEW: That's what it's all about is surviving.
KANGAS: Kevin, do you own any of the stocks you've mentioned or have other disclosures to make?
DEPEW: No, I don't know own those two.
KANGAS: OK. I want to thank you for being with us once again.
DEPEW: My pleasure.
KANGAS: My guest Kevin Depew of minyanville.com.
