Tech's Growth Stocks: Priceless or Worthless?

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April 21 (Bloomberg) -- Citi Private Bank Global Chief Strategist Steven Wieting discusses the markets and tech selloff on Bloomberg Television's “Bloomberg Surveillance.” (Source: Bloomberg)

Economics and profits with the investment of profits.

Which one is the high ground?

For the market, i think we need to see follow-through on profits.

Fortunately profits have risen more since 2007. we had decline in valuation from the last time the economy and markets the.

This time we do not believe the expansion is over with.

The distinguishing feature to me is the use of crash -- cash.

The idea that suddenly the very high cash files are going to be spent in the economy, tons of capacity.

I do not really buy that.

I think it will be a matter of time for us to gradually see capacity restraints build.

There is a lot of capital discipline.

That has an effect on slowing growth that tends to make it more sustainable.

We do not get into the type of environment where art on a major ceo's wall is investments.

You are also saying capital expenditures have been held back for so long where gunmen to the point where companies have to invest.

I think there is some of that.

Capital spending has picked up.

I think what is important is the busy week upon us.

A lot of tech earnings starting with netflix.

Tech earnings.

Earnings are 6.6%. those estimates have been revised 2.9%. that is quite a big revision downward.

It is fairly typical.

I think the estimates are clearly too low.

We actually have not seen a sequential decline in profits for s&p 500 companies from the fourth quarter since 2001. since the 2000 one recession.

If you look at the annualized rate of return in estimates, implies more than a 20% plunge in fourth quarter.

This is the really bad corder for earnings.

I think the economy is held back in one q. when you look at industrial stocks, big lou chips, they are in another world from tech.

Is that unusual?

There is growth momentum stock -- tech.

Firms that are given large market caps on the basis of promised profit.

All whole variety of other tech firms in the s&p 500 that are massively profitable and considered to be bolded text.

Twitter and tesla versus intel and microsoft is what you are saying?

Absolutely.

If you look at the broader aspect of information technology on the market, nothing like c99 where i.t. had a third of the market.

You are saying investor should buy more steady earning companies that pay dividends.

What does that say about the economy now?

That is a good strategy for the long run.

Information technology area, this is an area where the best-performing companies may be priceless.

The second-best may be worthless.

This is a part of the market that requires active management.

It is very different from what we would expect out of body -- that out of body experience is the earnings, looking at six of 13.36. that is the market priced to perfection.

Which is a? it?

It is not quite perfection.

Half it they're going up.

Study valuation with expert nation below consensus.

You would have a gain of eight or nine percent total return in u.s. stocks.

Now it is pretty rare when revenues and profits and share prices do the same thing.

The bottom line is there has been a thawing out of the bearish expect haitians.

Isn't for them to see bond money moving into equity money?

I do not think it is immediate.

I think it is far less complacent than it was last year.

Little by little, the bond yields will prove to below in relatively unrewarding compared to the past five years.

So if i am reading you correctly, follow the money and go where valuations are still reasonable.

Is that right?

Dividends have gone up 15.5% in the first quarter.

That is growing income.

No one's bond coupon payments were made larger.

Thank you.

Looking at earnings this quarter.

What are you focused on?

Even though the ipo market is

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

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