Should Investors Be More Excited About Dow 17,000?

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June 9 (Bloomberg) -- Gina Martin Adams, senior U.S. equity strategist at Wells Fargo, and Bill Janeway, senior advisor at Warburg Pincus, examine the current bull market, U.S. economic conditions, and the influence of the Federal Reserve as the Dow Jones Industrial Average flirts with the 17,000 range. They speak on Bloomberg Television’s “Bloomberg Surveillance.”

What you believe in.

We still believe in tech health care.

We upgraded materials.

We are starting to move into later cycle sectors.

We downgraded financials, downgraded discretionary.

We want nothing to do with interest-rate exposure.

Because rates are going higher?

Looks like the fed is inching toward rate hikes in 20 15 at sam point.

The market is already rotating that way with the under performance of discretionary's. and we are seeing some signs of life in the commodities.

Discretionary, for example, direct exposure through housing.

Financials, very direct exposure.

I think it's time for a monday morning jargon alert.

Materials, what is a material stock?

In the s&p 500, it is mostly chemicals companies are now.

Dupont.

You have some paper companies, some construction materials companies, and some metals and mining companies very but it is mostly chemicals.

Why is it that most types of companies are so cold lake cyclical companies -- so-called late cyclical companies?

Interest-rate sectors like housing where recovery gains momentum.

The nonresidential construction into industrial production gains.

Let's look at the non-correction.

This is the dow from early 2009. it goes up and up.

We are in a self -- the 17,000 range.

It was a big deal when it was the dow 1000. how does bill janeway adapt to the walls of worry?

There is a phrase you are never supposed to use and that's one i think we have to use.

This time is different.

We are coming off of a global financial crisis five years ago that was fully at the scale of what happened in the 1930's. this time, we did it with the public sector big enough to offset the collapse of the private sector when the banks froze.

And when the central bank was aggressive enough to star refinancing the banks.

Remember where we were five years ago and that we have only just now gotten back to the level of employment, five years later, that we were at in 2008. do you envision the market is for the weeds and the haves or will we get back to the enthusiasm i remember in the 1960's. every asset price in the economy is underwritten by a monetary policy that has never before been experienced.

The fed holding rates are down at the zero lower bound, lower rates at 2.5%-ish means that everything going on in the bond market and the stock market is conditioned on the fed's willingness and ability to continue to hold rates down.

Trying to use the stored patterns of market behavior relative to business cycles could be quite misleading at this time.

This market is running beyond and apart from the underlying economic fundamentals if we could ever find out what they are.

You just made an important statement.

You said payrolls are back to where they were before the crisis.

Except there is population growth.

We are 6 million jobs to the worst.

There is unused slack in the economy.

If only, inflation, if only.

There is slack in this economy.

There is growth potential in this economy.

I just want to follow the thought.

It is -- if that is the case, then why do you think rates are going up in 2015, which is only a year from now?

Because the fed is signaling that is what they are going to do.

The speeches of the last six weeks to eight weeks, they were talking about tapering qe and when the hike is coming.

You follow what the fed says.

Follow the fed into directions to get an idea of where they think they are headed and the market is rotating.

What is the market telling you?

Sectors are rotating in favor of the fed starting to increase interest rates.

Let's go to the note.

Which would be a good question for gina and terms of looking at the divergence between copper and the rest of the stock market because copper is thought of, hey, if you are in a late cycle, that is where you want to be.

We are not seeing that play out though.

We are seeing the industrial metals.

We have seen a recovery in ag prices and energy prices across-the-board the board but the industrial metals are lagging behind.

That is a trend you can play with in the index.

We love materials, but we love chemicals.

They like the metals and mining sector for that reason.

This is not a new trend.

We know that copper is in a bear market.

It seems to have something to do with nondomestic economic conditions.

China is mentioned quite a bit.

You play that trend.

Why does alix steel always get copper into every

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

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