S&P 500 Rebounds After Yesterday’s Drop

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Feb. 4 (Bloomberg) –- Wells Fargo Securities Christopher Harvey discusses the current state of the markets and why he sees the selloff as a buying opportunity with Scarlet Fu and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

A lot of the heady -- heavy lifting has already been done.

Based on fundamentals, some of the things we are seeing in risk, the mid-single digit is about appropriate and that is where we are at this point.

I do not think it will come down and bounce off.

Is there any reason for optimism?

As the fed comes out, scarlett pointed out earlier, and says, look, we are not backing off our backing off of qe.

And, we get better and better unemployment numbers but we all know it is because people are dropping out of labor fours were taking jobs that are horrible on wages they cannot live on.

Higher interest rates mean people cannot afford to go out and buy the tracks they cannot afford or the homes they cannot afford.

Why a positive outlook?

Interest rates, the tenure is to 60. rates are not going higher at this point.

Credit spreads are tight.

A lot of liquidity in the marketplace.

The overall market with gdp, the low single digits, it is still relatively robust.

When you look at what the fed is doing, the fed will and tapering proper -- probably toward the end of the year.

When they are done tapering, they are still at zero.

When we look at the economy and markets, we are not jumping up and down saying this will be a great year, but it is still a good year and you look back at the tightening cycle, the s&p was up about 50%. you can still see with the combination coming off the table, equities moving higher.

How much of what we have seen in a last couple days is the and strength and the repricing and liquidity being inspected?

A lot of it was repricing of risk.

The markets forgot about some of the for sovereign risk and they priced things to perfection.

Now all the market is doing at this point in time is discounting some of the macro risks at this point.

I wonder what you think about the breaking news mark crumpton came in with.

A little bit of discussion about this on surveillance this morning.

I am not sure.

Can they default?

Is it possible for puerto rico to default?

If they do not, do we have to solve them?

I am not an expert.

I cannot really give you a good answer.

It is a concern.

It is like our own grace.

It is a concern.

I do not think the tail will lag the dog.

Negative headlines coming in to an already jittery market.

When you look ahead, we have got the jobs report friday.

Next week, the new chair of the federal reserve testifies before congress.

Will either event provides support for the market?

I think so.

The market is finding a price where risk is appropriate and people can make money.

I think the market will digest a lot of this information and move sideways a bit and move higher.

When you look, there is still a lot on the table.

The economy is still in a good place.

Valuations are much higher than they were.

Still reasonable.

The relative value basis, i think they look pretty attractive.

Jeffrey saying they will hold tight on tapering.

I think a lot of market participants feel if they can spank the dow hard enough, janet yellen -- that is quite an image.

Thank you.

[laughter] janet yellen, already dovish, make him and give a little bit of what the market wants.

Yes.

I think the market, they are just repricing risk and janet yellen, the reputation is very dovish.

She comes in and the market realizes, it is going to be until the end of the year until tapering ends and there is a lot of domination.

Go back to the 2006 time.

. we have multiples of what we had on back then.

The markets did relatively well still.

I think she will come on and chew the market.

Ultimately, will find a footing here.

You covered the auto industry.

Do they worry about the volatility?

It is background noise.

Share prices, detroit was last time i talked to auto executives.

It was detroit.

It looks darn good for ford and general motors.

The car sales numbers that looked like a blip a month ago, and this month, they said it was the weather, but it is starting to be too many ticks it down and it is worry some.

You need to sell a lot of f1 50's in the economy.

Again, people are data point driven.

If you look at the broader economy.

It was still about 50. one data point.

Not a trend.

I think what we are seeing, a lower growth, but a robust environment.

It will take a lot to push the economy down.

All in all, it is steady.

You can make money in this kind of environment.

What is a drop?

Where?

Emerging markets are a good explanation for something.

The trade we always build up in class.

A little bit more leverage has come into the system and people are taking on more risk.

The opportunity is our smaller this year.

In order to exploit the opportunities, you have to become a little more aggressive.

With volatility, that is very low weeks ago.

You have seen it spiked up a little bit.

We can see more of that.

People are not positioned for a higher environment.

Thank you.

Chris harvey, the director of

This text has been automatically generated. It may not be 100% accurate.

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