"Market Monitor"-Ernie Ankrim, Senior Market Advisor for Russell Investments
Friday, June 05, 2009PAUL KANGAS: My guest "Market Monitor" this week is Ernie Ankrim, the senior market advisor for Russell Investments and welcome back to the NIGHTLY BUSINESS REPORT, Ernie. Good to see you.
ERNEST ANKRIM, SR. MARKET ADVISOR, RUSSELL INVESTMENTS: Thank you, Paul. It's a pleasure to be here.
KANGAS: I'd like to hear your thoughts on the May employment report.
ANKRIM: Well, obviously, better than the market expected coming in. But I think we're getting to point now where just not as bad as we expected is not going to work for this market. And that's why I don't think the market -- although in the early time took off -- actually couldn't finish the day strong. So we've-- we've come a long way since March 6, 90 days ago. The Russell 2000 is up 50 percent. The Russell 1000 is up 40 percent. The emerging markets up 60 percent in those 90 days so I like this. I like that things are getting better but we need to see things actually getting good and not less bad for me to be a little more confident about this market going forward.
KANGAS: What is your outlook for the price of oil, Ernie?
ANKRIM: I think it's possible we could get up as high as 80, but I don't believe we're going to resume the sort of astronomical prices we saw in the summer of 2008. This is out of strength and a little bit of weakness in the dollar from financial liquidity in the system. But I don't think there's a sustainable level above 80 for oil for some time.
KANGAS: The housing industry seems to be a key to any economic recovery in the nation. How far away are we from a recovery?
ANKRIM: Defining recovery is a little tough, Paul. I think that we're not going to see home prices rise for some time, but I think it's conceivable, early this next half of the year, we'll see prices bottom and from that point on stabilize for the next couple of years and that will get the job done for us.
KANGAS: Given all of these factors you've just mentioned, what is your stock market outlook? Are you a cautious bull or a reluctant bear?
ANKRIM: I like cautious bull. Like I said, we've come a long way in a short period of time, and I'm suspicious about anybody that believes the market goes straight up. But I do believe good things are coming for us later in the year on the economic front and as the market comes to see those, I believe that the equities will appropriately compensate us for that.
KANGAS: So there you are, a cautious bull indeed. Now on your last visit, December 19, you gave our viewers three buy recommendations. Let's see how they've done since then, Wyeth (WYE) did very well, 18.8 percent gain. That was a takeover, was it not?
ANKRIM: It was, Pfizer.
KANGAS: That was a good recommendation. Wells Fargo (WFC) can't seem to get out of its own way, down 15.8 percent. Would you buy it here?
ANKRIM: We hold it now. We still like it as a financial but, admittedly, that early March was no time to be in financials.
KANGAS: And you had one other recommendation and that did extremely well, Qualcomm (QCOM), up nearly 30 percent. I congratulate you on that one. Are you still with it?
ANKRIM: Yeah, we hold that. We still have strong expectations for that stock. KANGAS: And you would buy more of it here
ANKRIM: It's a little pricy now but it's still one of our bigger holdings and we certainly wouldn't want to sell any that we've held up to this point.
KANGAS: Let your profits run, that's old saying and a true one.
ANKRIM: That's right.
KANGAS: How about new recommendations, Ernie?
ANKRIM: The risky one I have this time Paul is Nike (NKE). I'm suspicious about the U.S. consumer, but I believe the non-U.S. consumer part of their business is going to be strong and the stock has been penalized appropriately for the weakness in the U.S. economy.
KANGAS: Well, they have a huge global imprint and that's what you like about it apparently.
ANKRIM: I do and especially on the Asian side, I think that there's greater strength there than in the U.S. and they're well positioned in that market.
KANGAS: How about a second selection?
ANKRIM: Well, Lockheed Martin (LMT), they have a great dividend really, relative to five-year Treasuries and they've got a long book of business in place. Again it's not too consumer sensitive and I like that.
KANGAS: OK, quickly now, we have time for one more choice.
ANKRIM: Goldman Sachs (GS), I think financials are going to get better as we go forward and they find themselves as almost a monopoly on the lead in mergers and acquisitions that will be back in our life before 2010.
KANGAS: OK, three selections and interest and Ernie, do you own any of these securities personally?
ANKRIM: No, only in the form of mutual funds I hold in my retirement account.
KANGAS: And they in turn hold these stocks, so indirectly you do own them.
ANKRIM: That's right.
KANGAS: OK. Our time has run out unfortunately, but thanks for being with us once again. It's been a pleasure.
ANKRIM: It's always fun Paul. Thank you.
KANGAS: My guest, Ernie Ankrim of Russell Investment.
