Consuelo Mack of WealthTrack recently interviewed Ed Hyman and Dennis Stattman on her program to provide their views on 2013. Ed has been rated as the number one economist for over three decades. Dennis has had a successful track record managing Blackrock's Global Allocation Fund (MALOX). The below video is part 1 of her interview with part 2 scheduled for next week.
In the interview Ed Hyman notes the market is in a "climb a wall of worry" phase. He believes many of the issues impacting investors over the last three years are still in place today. He states the last three years saw the equity markets do better in both the first and fourth quarters of the year. Given the strong start to 2013, he believes this could be the case again this year. A part of this positive strength in the markets is due to central banks expanding the money supply or injecting liquidity into the economy. Over the last five weeks, the U.S. money supply has increased by $200 billion (that is $2 trillion on an annual run rate basis.)
Dennis Stattman believes equity valuations look attractive; however, he is concerned with the sustainability of corporate profits as they are at a level, as a percentage of GDP, last seen after WWII. He does believe earnings expectations for companies may be too high. One segment of the market Dennis believes is turning into a tailwind for the economy is the improvement in housing. He believes housing formation is in a improving trend with home buyers now believing they better buy versus wait. This buy versus wait psychological shift will be positive for the economy do to the influence of housing on overall economic activity.