"Market Monitor"-Mark Skousen, Editor of the Market Letter "Forecasts and Strategies"
Friday, September 05, 2008PAUL KANGAS: My guest "Market Monitor" this week is Mark Skousen, editor of the market letter "Forecasts and Strategies." And welcome back to NIGHTLY BUSINESS REPORT, Mark.
MARK SKOUSEN, EDITOR, "FORECASTS AND STRATEGIES": Glad to be back.
KANGAS: When you were last with us in March, you were a little negative. You said not only was the economy in recession, but that we were also in a bear stock market, which proved to be true. But you did say in six months both the economy and the market should perk up. Today's jump in unemployment to a five-year high suggests that time frame might have been a little too optimistic. What do you think now?
SKOUSEN: Yes, I think so. Paul, I think that we're still in rough times. If you look at the misery index, which is the combination of CPI inflation, and the unemployment rate, we're now over 11. It's much higher than what it has been in the last year. I would say double from last year. So we're in an inflationary recession. There's no evidence yet that we have reached bottom. There is a lot of uncertainty in the marketplace. So I think caution is still the way to go right now.
KANGAS: Will this housing slump ever end?
SKOUSEN: Well, I hope so. It has been cyclical for as long as I've lived and as long as you've lived. And these cycles last 10 to 15 years. And what happens is it collapses and then it's a gradual recovery. So I see a recovery coming forward in 2009. But it's going to be a very gradual one. And it's one that's going to be difficult to pinpoint exactly when.
KANGAS: Mark, what do you see happening with interest rates?
SKOUSEN: Well, I think that interest rates are likely to stay even, maybe rise a little bit. The Fed is in control here. If we have another major increase in unemployment and recessionary fears, than you could see the Fed cutting rates again. I don't think it's a good idea. I think it would hurt the dollar. And so I would like to see interest rates actually go back up to a more natural rate.
KANGAS: What will get the stock market back on a bullish track?
SKOUSEN: Well, I think once the election is over, that uncertainty will pass. We'll know where we stand. I think if McCain wins, the stock market will rally very strongly, because he's in favor of tax cuts and maintaining tax cuts for investors. If Obama wins, I think the market will still rally because we've eliminated some of the uncertainty. We know where he stands. He knows he is going to raise rates on investors and on wealthy people. It's not good for the economy, but at least we know where that -- where we are there. And so I'm predicting that after the election we'll see a bump in the market. We'll see, I think, a good January effect, a good Santa Claus rally, I hope.
KANGAS: OK. Now in March, you gave our viewers four buy recommendations. Let's see how they've done since then. Goldcorp (GG) down, it was much higher at one stage, around 53. You did sell it there, of course.
SKOUSEN: That's right. We had a stop order in place. We sold about the same price, I recommended it at 42.
KANGAS: OK. And Aberdeen (FAX), you're getting 7.5 percent while you lost 11.6 in this last six months.
SKOUSEN: FAX has done well, I mean, it's a play on the dollar. The dollar strengthened recently.
KANGAS: OK. And you had two others, and I believe that they were -- you had a 2 percent rise in Gladstone (GLAD) and China Medical (CMED) up 26.4. Do you still like those?
SKOUSEN: Yes. Yes, I like all of the recommendations. We're stopped out of Goldcorp, although gold does look like a recovery, maybe is oversold at this point.
KANGAS: Would you buy any of these four stocks at this price level?
SKOUSEN: I think all of them look like really good buys at this time, absolutely.
KANGAS: OK. We've got to hurry. We just have one minute. How about some new suggestions?
SKOUSEN: All right. I've got three new recommendations, Volcano Corp. (VOLC), which is medical device company similar to China Medical, symbol V- O-L-C. And it has been growing, you know, sales at 40 percent a year. I think that looks good. I like Quest Capital (QCC), which looks like a penny stock, symbol Q-C-C, invests in mortgages and real estate loans in Canada, not the United States.
KANGAS: OK.
SKOUSEN: So I think that looks good, 10 percent yield. And finally a big giant company, a Home Depot (HD), H-D is the symbol. They have 2,000 stores. They're actually expanding to 55 more stores right now. I think it looks very good, selling at only 14 times earnings. The CEO just recently reported that he thinks the housing market looks like it's bottoming. So that chart looks pretty good for a recovery.
KANGAS: Good. Do you personally own any of these securities mentioned or have, rather, disclosures to make?
SKOUSEN: Well, that is true. Quest Capital is the one that I own. I think that is the deeply undervalued play, yielding 10 percent. Q-C-C is the symbol. I own that one.
KANGAS: All right. We've run out of time but thanks for being with us again.
SKOUSEN: My pleasure.
KANGAS: My guest, Mark Skousen of "Forecasts and Strategies."
