With only a handful of days to go before the election, what’s at stake for investors? How big a deal would a second term for President Obama or a first term for President Romney be for the economy and the markets? Top rated Washington analyst, Andy Laperriere and Morgan Stanley’s global Chief Investment Officer, Jeffrey Applegate weigh in on this week’s Consuelo Mack WEALTHTRACK.
Episode #919, Original Broadcast 11-02-12
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Andy Laperriere & Jeff Applegate
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It’s been a devastating week for many in the Northeast, particularly the citizens of the New Jersey and Long Island shores. For them any sense of normalcy is months away. Some will never recover it. We at WEALTHTRACK were very fortunate to escape the full brunt of Hurricane Sandy. Our homes did not lose power and our offices were closed for only two days. I hope you and your loved ones are safe as well.
Now it’s back to work to address the issues at hand. Tonight, on November 1st, the most pressing issue is the election. “Could it be any closer?” That was the headline WEALTHTRACK guest, Andy Laperriere, sent to clients recently and his answer was no! This one is just too close to call. The Washington policy veteran is tracking one election indicator in particular for guidance. It is the presidential approval rating, in the fourth year of a first term, exactly where President Obama is now. We will look back at other elections and compare them with the Obama/Romney race and hear Laperriere’s analysis.
The race might be close but for voters and investors, the stakes are significant and the outcome will determine some winners and losers. The new president has a myriad of challenges facing him including the possible fiscal cliff, which includes the expiration of the Bush tax cuts, payroll tax relief, and extended unemployment benefits. The president will make important decisions on health care and defense spending and on the possible replacement of Federal Reserve Chairman Ben Bernanke whose term expires in January of 2014.
Our guests this weekend are policy and investment pros. Andy Laperriere is Senior Managing Director of top ranked independent research firm ISI and heads its policy research team in Washington D.C. Laperriere has been a coveted Institutional Investor magazine ranked Washington team analyst for the past 14 years and the team has been ranked #1 for the past ten years. Jeffrey Applegate is the Chief Investment Officer of Morgan Stanley Wealth Management and is responsible for strategic and tactical asset allocation advice to clients. He leads the firm’s investment strategy team and chairs its global investment committee. I will begin the interview by asking Laperriere why he thinks the race is as close as it is. The two guests will also talk about the clear winners and losers depending upon the outcome.
On WEALTHTRACK Extra this weekend, each guest will also share a recent favorite book recommendation. If you who would like to see any of our future programs 48-hours in advance of their broadcast, you can subscribe to our WEALTHTRACK Premium subscription service on our website.
Have a great weekend. Make sure you vote. This election could be decided by a very slim margin. Make the week ahead a profitable and a productive one!
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THE ONE INVESTMENT
APPLEGATE: BETTER POLICY MIX
Emerging market equities
“It really hasn’t changed. It would still be emerging market equities to us, and we’ve been talking a lot about policy here. If you look at the policy mix in most emerging markets, it’s, for the most part, hugely superior to the policy mix, both fiscal and monetary, in most big developed markets, and you also have these economies where they’re at just a different point in their life cycle. So their potential GDP isn’t one or two or three percent in terms of potential growth. It’s more like five or six percent, so much better fundamentals and a much better policy mix. Now, emerging market equities have actually underperformed U.S. equities, not by a lot, about a percent and a half… certainly the valuation is not daunting if you look at emerging market equities. They’re actually pretty much in par with developed market with a better set of fundamentals and policy options.”
– Jeff Applegate
LAPERRIERE: INFLATION PROTECTION
Buy some hard assets
– Real estate
“So a long-term investment I think you need some protection against the risks of higher inflation. I think given the budget situation that we have, even though I’m relatively optimistic Congress will deal with it appropriately over time, that’s a real risk coupled with a very easy monetary policy. I think you need to have some protection against long-term inflation, not near term but in the long term.”
– Andy Laperriere
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From April 7, 2011
A television exclusive with Tocqueville Funds contrarian money manager Robert Kleinschmidt and Morgan Stanley Smith Barneys Chief Investment Officer Jeff Applegate, and their surprising views of the opportunities and risk in global stock markets.