December 26, 2008 - 6:03am
A few days before the Christmas John Curran, a contributing editor at the popular magazine TIME had a talk with two top strategists at Merrill Lynch: Richard Bernstein, who plots U.S. investment strategy, and Michael Hartnett on international. The journalist decided to figure out the opinion and forecasts of the experts on the following year. In the course of the interview the analysts touched upon the stock market in the U.S. and future of Chinese economy.
The first question of John Curran to the strategists was about the landscape that waits investors in 2009. Both Richard Bernstein and Michael Hartnett expressed their hope that the forthcoming year will be much better than the passing one noting that credit related stir will no longer be observed as it was the case within the last several years instead people will likely shift to self-investing from credit. When asked to clarify that statement Bernstein said that ‘it could be the stocks of high quality companies as opposed to the riskier stuff.’
In addition Bernstein cited the words of the U.S. economist Dave Rosenberg, who told that the GDP is going to continue decelerating through 2009 and it may slightly improve in 2010 with the recovery of the national economy to be saucer-shaped instead of V-shaped. The best sectors for investing will be ‘companies that are more related to water projects and highway projects and have minimal exposure to the energy and commodities side of the economy.’ Curran also asked about which of the funds are better for investments: growth funds or value funds. In this regard the answer was that it is not time to rely on value funds yet as long as they very depend on credit. Bernstein said that they prefer growth stocks.
In the course of the interview the strategists were also asked about the future of Chinese economy. Hartnett noted that their outlook for 2009 and 2010 is for an L-shaped recovery in economic activity (an L implies a prolonged period of no growth.). He underlined that the national policy that provides the big share of the economy to be under the government’s control will serve as a cushion to the growth slowdown. And while ‘Chinese growth is going to weaken, particularly via exports and to a lesser extent investment’ but ‘the consumption side of the Chinese economy is going to remain fairly robust.’
In regards with the trends to be observed in the stock market the strategists pointed that there will be bull market for Treasuries with Chinese equities can go up 50% within the following year.
The first question of John Curran to the strategists was about the landscape that waits investors in 2009. Both Richard Bernstein and Michael Hartnett expressed their hope that the forthcoming year will be much better than the passing one noting that credit related stir will no longer be observed as it was the case within the last several years instead people will likely shift to self-investing from credit. When asked to clarify that statement Bernstein said that ‘it could be the stocks of high quality companies as opposed to the riskier stuff.’
In addition Bernstein cited the words of the U.S. economist Dave Rosenberg, who told that the GDP is going to continue decelerating through 2009 and it may slightly improve in 2010 with the recovery of the national economy to be saucer-shaped instead of V-shaped. The best sectors for investing will be ‘companies that are more related to water projects and highway projects and have minimal exposure to the energy and commodities side of the economy.’ Curran also asked about which of the funds are better for investments: growth funds or value funds. In this regard the answer was that it is not time to rely on value funds yet as long as they very depend on credit. Bernstein said that they prefer growth stocks.
In the course of the interview the strategists were also asked about the future of Chinese economy. Hartnett noted that their outlook for 2009 and 2010 is for an L-shaped recovery in economic activity (an L implies a prolonged period of no growth.). He underlined that the national policy that provides the big share of the economy to be under the government’s control will serve as a cushion to the growth slowdown. And while ‘Chinese growth is going to weaken, particularly via exports and to a lesser extent investment’ but ‘the consumption side of the Chinese economy is going to remain fairly robust.’
In regards with the trends to be observed in the stock market the strategists pointed that there will be bull market for Treasuries with Chinese equities can go up 50% within the following year.