Closing Bell, March 2015

Where will the Bull run take Wall Street?

Everyone wants to know where will end in 2015, and we have to wait for it, but René Nourse thinks we are going to see 20,000 on the Dow and 2300 on the S&P, despite the fact that the Super Bowl didn’t fall into place in the way that we would have liked it to, as there’s a number of other things that are lining up that are going to get us through the year. 

So where does she see the NASDAQ heading? It’s very close to the 5000 mark and then of course there’s the very big debate about whether or not we are in a tech bubble. Are the valuations too high in the tech sector?

According to René, this is a big conversation that has been happening over and over again. “I think we’re going to punch through that pretty quickly easily. The comparisons between now and the late 90s are so far apart at this point, and even though we’re all fond of saying it’s different this time, it really is not the same kind of environment. The whole use of technology and the use of the internet are very much a part of the US economy, the world’s economy and how we do business. In the 90s it was still somewhat of a business model that businesses were trying to figure out the best way to capitalize on it. We don’t see that really happening at this point and there are a substantial number of opportunities in the tech world that have not really been explored such as hyper security, which is huge and a fairly fragmented area, but there are still great opportunities in that space. So the bottom line is no, I don’t think we are in a bubble, and this is not the same kind of space that we were in the 90s.”

Is it going to be a smooth climb or a bumpy ride along the way?

“It’s going to be bumpy. One of the things we’ve seen over the last 5 to 6 years is that the United States has kind of been a training wheel economy. We’ve had QE three to four times in a variety of different ways to try and get our economy going. So now we’ve just finally pushed into the fast lane or next to the fast lane and we’re now going into a regular economic recovery. Some of the interesting sectors to look at right now are some of the regular cycles such as industrial materials, manufacturing, and chemicals. We’re really starting to see those companies come to life. And as a result of that we’re seeing some more discretion coming into the forefront. It’s not going to be an easy ride, by any means, this first quarter, which we will get into as we have our earning season in April. It’s going to be rather messy.

The strong dollar is going to kick in and really wreak havoc on some of our multinational companies. We had a little bit of that in the fourth quarter. Now the first quarter it’s really going to be front and center. We’ve also had weather that that has hit local headlines and is still having a major impact. We’ve also had a West Coast port close that’s affecting a number of businesses that haven’t been able to get inventory or their raw materials. Foodstuffs have been sitting on the ships here in Los Angeles port for example, and Oakland. That finally has been concluded, but I think it’s really going to kick in this first quarter. We’ll see that in those numbers soon.”