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VOL. 129 | NO. 97 | Monday, May 19, 2014

Economic Experts Offer Analysis, Forecast

By Andy Meek

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A report from Fitch Ratings May 14 declared that going forward the U.S. economy will have to grow without the help it has enjoyed in recent years from things such as low interest rates and government spending.

Art Hogan of Wunderlich Securities served as the keynote speaker for The Daily News’ Money & Markets: The State of the Economy seminar.

(Daily News/Andrew J. Breig)

The report, “Mapping a Subpar Economic Recovery: What Can History Tell Us?” pointed instead to the more organic results from the so-called “wealth effect,” which sees consumers act more confidently as they see the stock market and housing market improve. That, Fitch said, will be where growth has to come from.

A day after the report’s release, Wunderlich Securities Inc.’s chief market strategist – who’s been all over the cable business channels in recent days offering commentary about the economy – stood before a Memphis audience and crystallized what’s going on in the economy at the moment, giving high-level analysis – as in the Fitch report – and personal-level takeaways, as well.

“You hear that Wall Street is out of touch with Main Street, and to a certain extent that’s true,” said Art Hogan of Wunderlich, who served as the keynote speaker for The Daily News’ Money & Markets: The State of the Economy seminar.

Joining him for a panel discussion Thursday, May 15, at the Memphis Brooks Museum of Art was David Waddell, president and CEO of Waddell & Associates; Kent Wunderlich, chairman, CEO and general counsel for Financial Federal; and Tom Sullivan, a member with Reynolds, Bone & Griesbeck PLC.

“Wall Street is ahead of Main Street, but not ahead of itself,” Hogan said. “You buy stocks to participate in the earnings growth of companies. But we saw that first-quarter GDP stinks and first-quarter earnings were lackluster.”

An attendee asks the panel a question during the Money & Markets: The State of the Economy seminar Thursday, May 15.

(Daily News/Andrew J. Breig)

Shares of Twitter, one company Hogan singled out because of its outsized place in the public sphere, are now down 56 percent from peak to trough, he said, “and it still looks expensive to some people.”

Europe, he went on, is not as bad off as it used to be. He said the first quarter represented a break from the recent past, in terms of this time around no companies significantly blaming the ricochet from Europe’s problems for any negative results of their own.

Hogan, as well as the Fitch report, also pointed to recent equity growth, but cautioned that bull markets are brought to an end by one of two things: a recession or a tightening of conditions from the Federal Reserve.

When a younger member of the audience asked the panel during the question-and-answer period for advice on how best to invest, Waddell responded with the oft-repeated truth that “stocks compound 10 percent annually, so it’s a long-term game.”

Panelist David Waddell responds to questions during The Daily News’ Money & Markets: The State of the Economy seminar at the Memphis Brooks Musuem of Art.

(Daily News/Andrew J. Breig)

“We spend a lot of time talking about the wiggles of the market, but the fact of the matter is you’ve got time,” he said.

Likewise, Wunderlich agreed that equities were a smart investment over the long haul. And Sullivan added more context, cautioning against the temptation to constantly tweak an investment strategy based on the market swings of the moment.

“Don’t jump in and out – stick to whatever program you decide,” Sullivan said.

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