Terranova keynote talk featured during second day of G.A.M.E. IV Forum
March 21, 2014 - Joe Terranova, chief investment strategist at Virtus Investment Partners and a regular contributor to "Fast Money" on CNBC, predicts a market correction next summer, followed by a strong recovery in the second half of the year. His ultimately bullish keynote talk was featured during the second day of Quinnipiac's Global Asset Management Education (G.A.M.E.) IV Forum at the Sheraton New York Times Square Hotel in Manhattan.
Terranova made an analogy between market headwinds and highway potholes, concluding that the holes -- resulting from seasonal bad weather (as sometimes cited for disappointing corporate performance) and the shifting position of the Japanese yen -- aren't deep or wide enough to prevent a fairly quick recovery. Citing strong capital expenditures by corporations, robust merger and acquisition activity, a manufacturing expansion and other factors, he said, "I believe growth will accelerate. The second half of the year sets up incredibly well to offset a summer correction."
Based on past market experience, the possibility exists for a long-lasting "super bull" market, Terranova said. "There are plenty of similarities," he said. "I'm looking for headwinds, but until then, I'm invested." He cited five tailwinds that suggest a quick recovery if a correction occurs, and these included good corporate profit margins, an accelerating U.S. GDP performance, the evaporation of debt ceiling concerns, an improved picture for the Japanese yen and stabilization in the economies of China and India.
Terranova noted as one sign of market strength that, in 2013, the S&P 500 never closed down in year-to-date performance. He downplayed concerns about possible interest-rate hikes, describing them as a healthy development. "Rates are normalizing, and I don't think that's a bad thing," he said. He praised the Federal Reserve for doing "a really great job" in managing the economy.
China's economy is slowing down, but Terranova minimized its impact on U.S.-based investors. "China has been slowing down for four years," he said. "I don't view that as a fundamental tailwind."
Although Europe has been in an economic doldrums, Terranova said he sees strong recovery in Germany, England and elsewhere. "Europe is investible," he said.
Terranova cautioned that it's the analyst's job to identify trends, but not to predict where the market will be on any particular day or month. "Things happen," he said. "The Ukraine pops up, or Goldman Sachs gets charged by the SEC."
The second day of the investment conference also included panels on financial journalism, social media in financial markets, mid-market corporate lending, trading options and equity research, to name a few.
About G.A.M.E. IV Forum
The forum, founded by David Sauer, a finance professor in the School of Business, attracted more than 1,000 student participants from 131 colleges and 21 countries to hear 113 speakers over two and a half days. G.A.M.E. is partially organized by Quinnipiac students, who also take part in Q&A sessions with the speakers.