How worried are you about the stock market? Is the near tripling of stock prices since the 2009 market bottom a cause for concern? This week’s WEALTHTRACK guest has some different and positive perspectives on the market. Jason Trennert is Managing Partner and Chief Investment Strategist of Strategas Research Partners, an independent investment strategy and macroeconomic research firm. Trennert is widely followed by institutional investors in the money management and hedge fund world, and is identified as one of “Wall Street’s Best Minds” by Barron’s. One of his most widely quoted themes is known as TINA – “There Is No Alternative” – meaning “there is no alternative to stocks right now”. We’ll ask him to explain.
WEALTHTRACK Episode #1106; Originally Broadcast on August 01, 2014
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Managing Partner and Chief Investment Strategist , Strategas Research Partners
The Dow’s 317.06 point decline today, a 1.9% drop put the blue chip average in negative territory for the year. The S&P 500’s 2% slide today gave it its first monthly loss since January.
According to Federal Reserve watchers such as Cornerstone Macro’s Andy Laperriere and Roberto Perli, this week’s policy making FOMC meeting sent another signal that the Fed is “on track for a first rate hike around mid-2015 and that it will proceed at a relatively brisk pace after that.” The two economists worry that the market is not taking that threat seriously enough. As they wrote to clients today: “the later the market comes in line with the FOMC, the sharper the adjustment will have to be.”
The Fed was given another reason to believe economic conditions are improving after a strong second quarter GDP report. The nation’s economic output grew at a robust 4% after a surprisingly weak first quarter decline of 2.1%.
Tomorrow’s release of July’s employment report will be another important determinant of Fed policy considering the central bank’s dual mandate of maximum employment and price stability. Laperriere and Perli note that the FOMC is “very close to its objectives, as the unemployment rate has been dropping fast and inflation started picking up earlier this year.” They say maximum employment is around a 5.4% unemployment rate and price stability means around 2% inflation. The two analysts add that “the last time the Fed was this close to both of its objectives it had been tightening already for a year.”
How worried are you about the stock market? Is the near tripling of stock prices since the 2009 market bottom a cause for concern?
A recent Bloomberg poll of financial professionals found that 47% of them feel the market is close to unsustainable levels, while 14% saw a bubble. And most were expecting stock volatility to increase within six months. All of these expectations might indeed turn out to be prescient. As financier J.P. Morgan once commented about the stock market: “it will fluctuate!”
However there are other aspects of the market which provide a different and more positive perspective and they are articulated by this week’s WEALTHTRACK guest, Jason Trennert. Trennert is a financial thought leader whose work is widely followed by institutional investors in the money management and hedge fund world. He is
Managing Partner and Chief Investment Strategist of Strategas Research Partners, an independent investment strategy and macroeconomic research firm he co-founded in 2006.
Barron’s has identified Trennert as one of “Wall Street’s Best Minds.” Prior to Strategas, Trennert was the Chief Investment Strategist at ISI Group, the firm run by WEALTHTRACK guest Ed Hyman. Trennert’s ISI team was voted one of the best investment strategists by Institutional Investor magazine for three years.
Trennert and his Strategas team are known for their in-depth economic and market analysis and identification of investment themes. One fascinating trend they have uncovered is how much the supply of publically traded stocks is shrinking.
The number of companies on American exchanges has shrunk from a high of nearly 9,000 in the late nineteen nineties to 5,000 today, a decline of 43%. On the flipside, private equity assets under management have soared over the last decade, as more companies are choosing to go private.
Trennert notes that simple supply and demand dynamics could contribute to the continuation of the stock market rally.
One of Trennert’s most widely quoted stock market themes is one he wrote about in The Wall Street Journal. It’s called TINA, which stands for “there is no alternative.”
On this week’s show, we’ll ask him to explain his theory that “there is no alternative to stocks right now.”
Have a great weekend, and make the week ahead a profitable and a productive one.
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Clips from the WEALTHTRACK archives with additional appearances of Jason Trennert between 2008 and 2012.
Running Your Own Business
Financial thought leader and Chief Investment Strategist Jason Trennert left the security of ISI Group, a top ranked macroeconomic research firm in 2006 to launch his own firm with two partners. Strategas Research Partners is now a highly successful independent research, strategy and policy firm in its own right. We asked him to share the lessons learned from running his own business.