"Market Monitor"-John Manley, Managing Director of Global Wealth Management at Citi Smith Barney
Friday, October 03, 2008SUSIE GHARIB: Our "Market Monitor" guest says the government`s bailout package will help the economy and investor confidence. Joining us now, John Manley, managing director of global wealth management at Citi Smith Barney. Nice to see you, John.
JOHN MANLEY, MANAGING DIRECTOR, GLOBAL WEALTH MANAGEMENT, CITI SMITH
BARNEY: Hi, Susie.
GHARIB: All right. Well, the bailout package is law now and all of the doubts are coming in that will it really help the economy? Will it boost investor confidence, and most important of all, what will it do to the markets? What are your views on all of this?
MANLEY: Well, I think it will help the economy. I think it has to. We have to work through the particulars and decide how the money is going to be applied. What we do know is we don`t want to repeat the mistakes that were made in the late 1920s and early 1930s. We need government intervention. We need more liquidity for the system. And I think this is probably one of the best ways to proceed.
GHARIB: Even with this bailout plan, what does it mean for the markets and investor confidence? Are we in for a long bear market?
MANLEY: Well, we`ve had a fairly substantial bear market already. I think it takes a while before it hits the economy. One of the things we`re going to see over the next couple of months are the real feet on the ground effects of all we`ve been talking about for the last couple of m months. I think the unemployment number today -- or the employment number today was not a good one. And I think it means the economy is weaker than we hoped it would be at this point in time. It also probably means some Fed intervention down the road.
GHARIB: All week long, investors are saying, what should I do with my money? Is my money safe? Can you give any quick advice to -- generally for long-term investors?
MANLEY: Well, you know, I think the system is still basically sound. Capitalism is a great system 95 percent of the time. Unfortunately we`re part of that -- the cycle right now where it doesn`t act that well. I do tend to think the government is doing the right things. We`re not letting things slip. We`re staying on top of things. We were sort of in a tunnel. We thought we saw the light at the end of the tunnel. The tunnel collapsed. We`re digging our way out now, but the light is still there.
GHARIB: Oh boy. Let`s go over your stock recommendations from last time when you were on our program and what you`re recommending now. The four that you recommended last time have had some rough sledding with the exception of one. Let`s go down the list. Sempra (SRE) at the top of your list. It had a difficult time these last couple of months. Do you still own the stock?
MANLEY: We`re sort of on the sidelines right now. I think it was an interesting story. It didn`t play out the way we thought it would. I think the whole sector had some problems as well.
GHARIB: What about Raytheon (RTN)?
MANLEY: I still think it is a very good story. I think defense is defensive, and that will mean more, certainly on a relative basis, going forward.
GHARIB: All right. Let`s continue on. Johnson & Johnson (JNJ) was one of your stock picks that did move up modestly. What is your view on Johnson & Johnson today? Do you still own it?
MANLEY: We would. We would still be buyers. It is a very high-quality company. It is a large cap. It is in the right areas. I think it has a good mix of consumer and health care, and I think its drug pipeline is being significantly underestimated by the Street at this point in time.
GHARIB: Should investors put new money into Johnson & Johnson in this current market?
MANLEY: I think so. I mean, the stock has held up very well, as you mentioned, because all things being considered, but I think the characteristics that made it attractive in the last couple of months will probably make it attractive going forward over the short-term. And you have a very high quality investment, in our opinion, longer term.
GHARIB: What about Apple (AAPL). You know, the stock, a real swoon, although in this interim period it did get as high as $189. What is your view on Apple today?
MANLEY: You know, when I was last on the show, Apple had been under pressure. And I think the time to buy a true growth company like Apple is when it is under pressure for some exogenous reason. Back then it was a question about skipping in a product cycle, this time I think it is issues about the economy. Those things come and go. Apple is still a true innovator, a true leader in its field with a very strong business model. You only get to buy these things at decent prices when they`re under pressure for some other reason. And I think that makes the timing on Apple as a purchase very good right now.
GHARIB: Let`s move on to your two new recommendations. Kimberly-Clark (KMB) at the top of your list. Why?
MANLEY: A great story as far as defensive is concerned. They`re in paper products. They are very, very sensitive to changes in commodity prices, as commodity prizes come down, as we think they will, very strong plus for Kimberly. The stock is where it was nine years ago and earnings are 40 percent higher.
GHARIB: OK. We have 30 seconds. ConAgra (CAG) is your last recommendation? What`s the story?
MANLEY: A great package food company, and very well-run. I think it is in a very strong situation as far as declining commodity prices, very stable growth as far as the demand side is concerned. I think it is a perfect stock for the times we`re in right now.
GHARIB: John, do you own any of these stocks or does your firm have any involvement with them for disclosure purposes?
MANLEY: I do not own any of these stocks and as far as -- I do not know of any connection my firm has with them.
GHARIB: All right. John, thank you so much for all of this information, we appreciate it.
MANLEY: Thanks, Susie.
GHARIB: Our "Market Monitor" guest tonight, John Manley of Citi Smith Barney.
