"Street Critique"-Hilary Kramer, Chief Market Strategist at Greentech Research on Nightly Business Report

Wednesday, June 24, 2009

PAUL KANGAS:Tonight's "Street Critique" guest says investors must tread carefully in the current market. She's Hilary Kramer, chief market strategist at Greentech Research and author of "Ahead of the Curve." And Hilary, good to see you again.

HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: It's a pleasure to be here, Paul.

KANGAS: This market seems to be bumping up against some resistance despite bad news, here there and the other place, like today's new durable goods orders very strong and yet the Dow ends down 23 points. What's going on?

KRAMER: Well, the problem is that we have a jobless recovery going on. Unemployment continues to rise, which means ultimately people don't have money to spend. The consumer has their hand against their back pocket and therefore stocks can't rise because the earnings won't be there and the market comes off.

KANGAS: How about today's open market committee decision? Were you impressed in any way?

KRAMER: Not at all, I was very disappointed with the Fed today because they spoke from both sides of their mouth. They wouldn't be clear. We have a recovery but it will take more time, and the bottom line is the Fed implicitly told us in their statement that mortgage rates are going to rise. If that happens, all the work that they've done will be for naught, because mortgage operates rising are going to put us back into a housing crisis.

KANGAS: So what are you telling your followers to do? What kind of a strategy in this market?

KRAMER: I've been very careful, as you know and very conservative. So what I say is be very, very careful, stay on the side lines, don't worry about jumping in and missing the opportunity in any kind of correction. We could have a five to 15 percent correction. But it doesn't mean that that's your entry point. Remember, the market just went up 40 percent; it can go down significantly.

KANGAS: So they should keep their gun powder dry for the moment?

KRAMER: Absolutely.

KANGAS: But yields in the Treasury market are so low, there must be some way to generate a little more cash?

KRAMER: Well I think the reality is that prices are dropping, especially in real estate. We don't have inflation right now like that was feared. So cash can go further and cash is king, because I've never seen this little money floating around. There's such a run for cash. So it's fine to have cash on the sidelines and make 3 percent in a certificate of deposit.

KANGAS: So you're saying that anything on the up side is nothing more than a non-lasting bear market rally, correct?

KRAMER: That's right. And the reason, Paul, is that it has taken us, it took us four years to get to this point, from 2003 to 2007, excess, creating profits from nothing on Wall Street. And now we can't just have a recovery in three months or six months; it doesn't work that way. We have to work through and pay for the excesses and the crimes of a few, but we will over time and the economy will improve and we are significantly better than the rest of the world in their situation.

KANGAS: Very good. Still bearish and every market rally we see should be sold into, is that what you're telling us?

KRAMER: I would say take your profits off the table if you went into the market in 2009. However, if you're a long, long-term investor, ultimately we will recover. It just isn't overnight, so you can stay there in the market and wait.

KANGAS: All right Hilary, very good. Thanks for being with us again.

KRAMER: Thank you, Paul.

KANGAS: My guest, Hilary Kramer of Greentech Research.