Tags: Wilcox | GDP | S&P | stock

Longboard's Wilcox: Bull Market Will Blow Past Slow GDP Growth

By    |   Friday, 28 June 2013 08:13 AM

The stock market is set to ignore tepid gross domestic product (GDP) growth and will keep powering upward to new highs, according to Cole Wilcox, CEO of Longboard Asset Management.

Wilcox told Yahoo he is looking for a reversal upward from any downdraft caused by the Commerce Department’s downward revision of first-quarter GDP growth from 2.4 percent to a final 1.8 percent reading.

“I think [we will see] a continuation of the bull market that we’ve been in for a while,” he said, with a prediction that Monday’s low point of 1,560 on the Standard & Poor's 500 may have been a bottom for the time being.

Editor's Note:
 
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

“I definitely think the pullback will reverse and take out new highs as we move forward. Whether or not [1,560] was the bottom or we're still getting there, I just don't see this [sell-off] as something that's going to get out of hand."

According to Wilcox, construction and employment are the biggest factors for the U.S. economy, and he is positive about both. “I think that is just going to be a continued creep as we move forward,” he told Yahoo.

Wilcox, whose firm manages futures from both long and short positions, said Longboard is staying long developing market equities, but now has a short position in some emerging markets.

He said the firm also is net short in some interest rate trades, including gold, silver, other metals and other commodities.

The downward revision in GDP was due primarily to lower reported consumer spending on services, which some economists attributed to the effects of federal cutbacks, according to USA Today.

Part of the drop in consumer spending reflected a decline in spending on healthcare, said UBS economist Drew Matus, almost 40 percent of which is paid for by Medicare or Medicaid and similar federal programs.

Most forecasters expect the economy to accelerate in the second half of the year, as the housing market makes more gains and the impact of federal spending cuts ebbs, USA Today reported. The GDP report highlighted 14 percent growth in residential investment in the first quarter of 2013.

However, Paul Edelstein, director of financial economics at the research firm IHS Global Insight, estimates the U.S. economy will grow by just 1.6 percent this year, The Huffington Post reported. That would be considerably short of the economy's long-term average growth rate of 3 percent, and means it will be much harder to reduce unemployment quickly from its current 7.6 percent, The Post said.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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The stock market is set to ignore tepid gross domestic product (GDP) growth and will keep powering upward to new highs, according to Cole Wilcox, CEO of Longboard Asset Management.
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2013-13-28
Friday, 28 June 2013 08:13 AM
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