"Market Monitor"-Robert Drach, Publisher of the "Drach Weekly Research Report"
Friday, July 10, 2009PAUL KANGAS: My guest "Market Monitor" this week is Robert Drach, publisher of the "Drach Weekly Research Report" based in Tallassee, Florida. Welcome back to NBR, Bob. Good to see you.
ROBERT DRACH, PUBLISHER, DRACH WEEKLY RESEARCH REPORT: Good to see you Paul.
KANGAS: When you were last with us nearly six months ago, you were concerned about delays in getting stimulus money into the economy. Are you still concerned about that?
DRACH: No, no --
KANGAS: No?
DRACH: It's beginning to trickle in, And this changes things dramatically. It's a very straightforward situation.
KANGAS: So you're seeing real progress. Does that mean the stimulus boost will eventually help the stock market?
DRACH: Oh yeah. but you ought to be seeing the beginning of it. It changes things fundamentally, because once it starts, it doesn't stop. It's a massive, massive amount, worldwide. It goes on to 2015.
KANGAS: What's your time frame on getting this into the economy?
DRACH: It will pick up its pace in the 2010 and it keeps coming. It's huge. It's massive. This creates a technical condition, too, that initial lows, the cycles, these infusion cycles, are very rapid. It came off the March lows and they're never revisited.
KANGAS: So that was the bottom?
DRACH: Yes, that's your bottom and the money is coming. Huge.
KANGAS: So no need for another stimulus like they're talking about?
DRACH: That doesn't mean you won't get one.
KANGAS: No, but --
DRACH: And all the consequences.
KANGAS: But no need for one in your opinion? DRACH: No.
KANGAS: What about the stimulus and the threat of inflation down the road?
DRACH: Absolutely. You get inflation and you get productivity.
KANGAS: Productivity, that's the good thing.
DRACH: It's money supplied. It has two directions to go. So you've got to get inflation, you've got to get productivity, both.
KANGAS: So you're bullish on the stock market at this point? DRACH: You have to own the productive assets. Otherwise (inaudible)kills you.
KANGAS: OK. Bob, you've been running the NIGHTLY BUSINESS REPORT model portfolio since its inception way back in 1995. Let's just see how it's doing versus the Standard & Poor's 500. Look at that. The Drach model portfolio up 98 percent since then compared to only 69 percent for the S&P 500. I congratulate you on a great job.
DRACH: It's going to get better.
KANGAS: OK. Let's hope so. In January, in your last visit, you recommended three stocks. Let's see how they performed. Matthews International (MATW), which is in the funeral business, I understand, down, which is strange, down almost 21 percent. Do you still like it?
DRACH: Yeah. I think anything in quality. There's a big divergence in quality in this market. Quality stocks have under performed the lower quality.
KANGAS: So it's their turn to come to the front?
DRACH: Yeah.
KANGAS: Petro Canada (PCX) a great big winner, but didn't that get a buyout bid?
DRACH: Yes, Sun Corps. It's still (inaudible) It's still up.
KANGAS: That will go day to day.
DRACH: Yeah. KANGAS: ...in tandem. And there was a third recommendation and we all know this one -- DRACH: Oh, yeah. KANGAS: Poor old GE (GE) just can't seem to find a friend. DRACH: That's representative of the quality stocks, big divergences. KANGAS: OK. How about some new recommendations? DRACH: Tonight we'll stay with quality as always with a little international flair and I think Caterpillar (CAT). KANGAS: There it is, CAT on the big board. DRACH: You want them depressed and high quality. KANGAS: That stock is down. DRACH: Yeah. KANGAS: That's the way you like it. DRACH: And then we get (INT) World Fuel Services. It's not down as much. KANGAS: Aviation fuel? DRACH: Yeah. DRACH: Worldwide. KANGAS: INT is the symbol? DRACH: Yes and Nike (NKE). KANGAS: Let's get Nike up there, NKE on the big board. DRACH: Well, they sell shoes all over the world. This is an international stimulus. Everybody is making money. KANGAS: Right. DRACH: As fast as they can. KANGAS: So you're about as bullish as I've seen you in a number of years. DRACH: In the 30 years we've been talking together or more, it's the most dramatic I've ever seen and the core is additional money supply. It's coming.
KANGAS: Money supply going to be burgeoning, so to speak.
DRACH: And inflation and productivity.
KANGAS: OK. Incidentally, the stocks you mentioned, do you own those personally or --
DRACH: No, we use these on the website.
KANGAS: So it's part of the model portfolio.
DRACH: Right.
KANGAS: OK. Bob, as always, I want to thank you for sharing your thoughts with us.
DRACH: Good to see you, Paul.
KANGAS: My guest, Robert Drach of the "Drach Weekly Research Report."
