"Street Critique"-Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, September 02, 2009PAUL KANGAS: Tonight's "Street Critique" guest says the recent bull run was in some ways an artificial rally. She's Hilary Kramer, chief market strategist at Greentech Research and Hilary, welcome back to NIGHTLY BUSINESS REPORT.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Thank you, Paul, pleasure to be here.
KANGAS: Hilary, you've been bearish in the face of this recent rally. What do you think makes that run-up artificially inflated?
KRAMER: Well, it was really just traders, big institutions out there buying stock, getting into the market and in many cases leveraging up. Then Paul, we've had the individual investors, the small investors deciding to get on the train because they wanted to make up for their losses.
KANGAS: We have seen a lot of bullish economic data that's been out. What do you think of that?
KRAMER: I don't believe that it's bullish. It's less bad. I think today, what were the job losses for private companies? It was 298,000, sure, it wasn't the 700,000 or so between January and March. But we're still losing jobs. And we're losing jobs for the month of August. Very few people usually get laid off in the month of August. It's actually vacation time. So the news isn't as positive as it appears.
KANGAS: Are we in then for another tough September-October period, which is traditionally kind of bad for the market?
KRAMER: I think we are, no matter what, Paul and that's because we've had such a meteoric rise in the stock market. I mean everything has to have some sort of equilibrium. So even if it were justified, this has been too fast, too much and also don't forget there are a lot of redemptions. There are a lot of big pension funds that have asked for their money back on December 31, so a lot of the investors have to sell off in order to raise that money. Plus September and October we're going to see more volume. Don't forget all the volume basically in August and July, AIG, Citigroup, Fannie Mae, Freddie Mac, stocks that we consider dead money in our business.
KANGAS: What are you hearing on the trading desk these days?
KRAMER: There's a lot of shorting, meaning the big fast money investors are betting against stocks and they're slowly peeling out of position. There's also concern because the individual, the consumer, is having a tough time getting credit, especially mortgages. A 30-year fixed mortgage may be at 5.15 percent, which historically, that's a great number, but it doesn't matter if a bank won't give you a mortgage.
KANGAS: Is there anything that you're buying or looking to buy at this stage?
KRAMER: Well, what I'm waiting for is a 10 percent correction in the market. So only the S&P to be in the 900 range. I don't think we're going to see 666 again which was our March low. But once we get to that range, I'm going to get right in there and buy the market leaders, especially the financial institutions and stocks like Goldman Sachs and of course the technology companies and some of those big brand companies, the Starbucks, the Harley Davidsons. Right now they've done very well and they've come back, but they could fall again, because people consider them potentially on the garbage heap.
KANGAS: You do or do not own those stocks you just mentioned?
KRAMER: I don't own any of those stocks. I don't own any of those. I'm waiting for them to come down and then I'll pick them up.
KANGAS: Very good, thanks for joining us again.
KRAMER: Thank you Paul. It was a pleasure to be here.
KANGAS: My guest, Hilary Kramer of Greentech Research.
