Expect a Half-Decade of Weak Growth - Barron's Interview

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 |  Includes: EWJ, EWZ, IYW, KOL, OIH, PPH, UNG, USO
by: SA Eli Hoffmann

Barron's interviews Byron R. Wien, chief investment strategist at Pequot Capital. Wien globtetrots frequently to get first-hand insight into global markets.

Some key comments:

  • "Maybe the financials have gone down as far as they are going to go down, but I don't think they are going up with any verve." So if financials are contracting, what's going to expand? Wien says technology and health care, and their ETF proxies HOLDRS Pharmaceutical (NYSEARCA:PPH) and iShares Dow Jones US Technology Index (NYSEARCA:IYW).
  • The U.S. and Europe will struggle to produce 3%+ GDP growth over the next five years. Expect a slow comeback.
  • Two soon-to-emerge aspects of economic weakness: High unemployment and a collapse in consumer credit.
  • The market low on July 15 was significant; it may be tested, but won't be severely penetrated.
  • Oil will stay in the $100-115 range.
  • Natural gas (ETF: UNG), oil (ETF: USO) and oil-service companies (ETF: OIH) will continue to show very good earnings improvement. Coal prices (ETF: KOL) will stay firm, so coal stocks look attractive.
  • He's positive on Brazil (ETF: EWZ) but not Japan (ETF: EWJ).

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Of interest: Byron Wien's ten surprises for 2008 and Byron Wien's five sure things for a turbulent market