Tags: Charles Payne | stocks | Fox Business Network

Fox's Charles Payne: Stocks Poised for Only 'Modest' Gains Amid 'Periodic Pullbacks'

By Dan Weil   |   Thursday, 09 Jan 2014 01:57 PM

After soaring upward last year, stocks have "modest" gains in store for them this year, says Charles Payne, president of stock research firm Wall Street Strategies and a contributor for Fox Business Network.

The Standard & Poor's 500 Index jumped 29.6 percent in 2013.

"Periodic pullbacks" are coming in 2014, Payne told Newsmax TV in an exclusive interview. "Even a correction isn't necessarily out of the question." A "correction" is commonly referred to as a decline of at least 10 percent.

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But that doesn't mean he's bearish. "We've been on an absolute tear for a long time, but from a fundamental point of view, the stock market's not overbought," Payne said.

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"It's not absurd, and the idea that we would actually see the market collapse as the U.S. economy gets better is not a theory I'd buy into anyway. So we're due for some pullbacks here and there, but I'm excited about individual opportunities."

Among Payne's investment themes are global peace and global prosperity. "There are so many places out there in this world where the average American sees dirt roads, but they're building a Four Seasons Hotel," he says.

"And then the ability of a company, particularly American companies, to take advantage of that stuff. So the companies I have are growing around the world."

In South America, for example, "they can't get enough Whirlpool refrigerators and they can't get enough Harley Davidson motorcycles," Payne said. "So you want to have some industrial names, and then you want to have some areas where we're really ramping up."

Cyber security is another sector he likes. "It's going to be huge, we're going to see more breakthroughs, and corporations are finally going to have to spend money on this stuff," Payne said.

On the jobs front, he expects monthly payroll gains above 200,000, perhaps up to 300,000. The economy added 203,000 jobs in November.

"But here's a wild card in all of it," Payne said. "Main Street right now is not taking the bait. People still are riding down debt, they're barely using their credit cards. They are spending, but they spend what they make at the expense of savings."

As for the Federal Reserve, Payne expects it to regularly continue the tapering of its bond buying that it began this month. He anticipates the Fed will complete the tapering process by year-end.

"I don't think there will be any major impact on the economy, because I don't think it was working in the first place," Payne said.

"Half of the money was going to banks to buy junky assets [mortgage securities] from them. . . . It's sort of like a nuclear waste facility, the Federal Reserve's balance sheet."

The other half of the money was used to buy Treasurys, allowing "the federal government to spend as it will," Payne said.

"So this money really wasn't making its way to Main Street anyway, which is disheartening, because if something happens and that $4 trillion Fed balance sheet blows up, guess who's going to be on the hook? The very people who didn't get any of the money in the first place."

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