At the CFA Institute’s Global Financial Crisis Roundtable this morning, some prominent Wall Streeters got together to parse all that’s gone wrong over the last four months, and what it means for 2009.
Their verdict was broadly bearish on the economy, but surprisingly upbeat for stocks.
In a conversation with the WSJ’s Jason Zweig, institutional guru Theodore Aronson, Goldman’s Abby Joseph Cohen, bond expert Martin Fridson, and economist Jason Trennert talked about the economy, the consumer, and investing.
Audio of the discussion isn’t up yet, but should be here eventually.
Highlights from Cohen and Trennert below:
Cohen made it clear she thinks that many (though not all) markets have fallen enough to make new opportunities attractive. “There is value being re-established,” she said. All the analysts said the macro factors, including the incoming administration, will matter for markets. There, Cohen said Wall Street looks confident in the Obama Administration’s economic plan because his team shows “every sign of being more prepared than any other administration in history in terms of hitting the ground running." She also made a longer-term case for U.S. equities, saying today’s lower valuations are broadly compelling thanks to some enduring strengths in the U.S. economy including growth prospects bolstered by better relationships with Asia and our highly productive workforce.
Jason Trennert, Strategas Research Partners’ strategist, said that while “the economy is probably going to get a lot worse before it gets better,” equities look “awfully close” to the ultimate bottom in this market. He said that while measures like joblessness are likely to get worse, stocks almost always rebound before the economy turns. That said, unlike earlier recessions, this time around consumers are only now starting to quake following damage from a long, panicky year in the financial sector. If they cut back mightily on spending, expect pain to linger. His other X-factor, the velocity of money in flowing around the global financial system currently being led by the federal government, could make or break a recovery too. Still, when it comes to stocks, "we’ve probably seen the worst," he said.
Looking for specifics? Trennert repeated a few investing themes today that he talked up back in October when I profiled him just as market declines really kicked in. He's still focused on companies that have access to capital in a new world where “balance sheets aren’t going to be for sissies anymore.”