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Bill Greiner, CIO of UMB Asset Management, appears as a guest on CNBC's "Closing Bell"
June 20, 2008
| Time: | 3:00 PM CT |
| Station: | CNBC |
| Location: | National Cable |
| Program: | Closing Bell |
Maria Bartiromo, Co-Anchor:
Taking a closer look at the day's stock market action. Meanwhile, I'm joined by Bob Turner,
chief investment officer at Turner Investment Partners, Bill Greiner, chief investment officer at
UMB Asset Management, along with CNBC's Bill Griffeth and Michelle Caruso-Cabrera.
Nice to have you all with us. Welcome to the program, everybody.
Bob Turner, let me begin with you. When you see a market down more than two hundred, what
are you thinking? Bargain hunting or more bad news to come?
Bob Turner, Chief Investment Officer, Turner Investment Partners:
Well, it's not very pleasant, particularly on a Friday afternoon in the summer, but I would say
more bargain hunting. We're approaching a level that we had experienced both in March and
January and those proved to be lows with a nice bounce from there. So I think we're getting
pretty close to a bottom here.
Bartiromo:
So, Bill Greiner, do you agree with that? What are you telling clients to do right here?
William Greiner, Chief Investment Officer, UMB Asset Management:
We're telling clients to maintain a relatively defensive position, Maria. We think that there's
probably some more bad news to come. Your other guest may be correct; we may see a short-term
bounce, but we feel that there's probably more financial stress over the next two or three
months to be released on the markets.
Bartiromo:
Well, part of the issue, Bill Griffeth, is the fact that this market seems to be playing hostage to
the price of oil.
Bill Griffeth, CNBC Contributor:
That and you wonder, Maria, what's going to happen first: will oil peak? Or will the credit crisis
bottom? Something has to give there. We had Dan Fuss on earlier today. He oversees a
hundred billion dollars in debt securities managed at Loomis Sayles, and it is his contention that
we're nearer the end of the credit crisis-we're probably in the top of the eight inning, as he put
it, using that baseball analogy. We will still feel some pain, but he feels that the lion's share of
the crisis is behind us and he's starting to buy, to do some bargain hunting among the
distressed debt, especially among the investment bankers on Wall Street.
So we have to wait to see for a sign: either the credit crisis bottoming or the oil price peaking.
Both of those, of course, have slowed the economy down. Once we see that-until we see that,
though, I think the stock market is going to suffer.
Bartiromo:Back and forth, and it's a good point that you make.
Bob Turner, you agree that, perhaps, over the short term, this does represent a bit of an
opportunity. Tell me where your looking at, what you're telling clients to do in this environment.
What do I want to own when this market seems so volatile?
Turner:
Well, lately, the market has developed a perfect inverse relationship between oil and some of
the early cycle stocks and financials. So, as Bill Griffeth mentioned, if we do get oil ultimately
heading down, you???re going to see some of the early cycle stocks, such as a housing stock,
such as a financial stocks, and even some of the tech stocks begin to move up. So that's where
we focused our attention.
Bartiromo:
I see.
Michelle, let me ask you about that story on oil. Do you have any reason to believe that anything
reverses course? I mean, a lotta people will say, "Look, once we do begin a significant sell-off,
it's going to be sharp." But there aren't any fundamentals that really indicate that that's going to
happen any time soon.
Michelle Caruso-Cabrera, CNBC Contributor:
Yeah, if you're talking about the price of oil, I think we started to see that yesterday when China
said they were gonna raise the price cap. That's the first sign. They didn't do it enough yet, but
they're certainly moving in the right direction. You know, look, this market is obviously tough, but
the thing is we are seeing significant behavioral shifts in the world right now because of these
high oil prices.Every day, we get news, whether it's GM or Ford coming out and saying they???re gonna delay
launches of different vehicle designs, whether it's people now saying that they're driving less or
even there are counties in the country where they're talking about only four-day workweeks.
You can make money in every market; I think the key is to find out where the wealth transfer is
happening and how you can play it right now if you believe these-maybe oil doesn't break,
maybe it peaks and flattens out. And then, if it's up here for awhile, you're gonna have
significant behavioral changes that stick around.
Bartiromo:
Yeah, well Bill Greiner, what about that? You mentioned oil names that you really want to be
invested, because that where the money is moving. Michelle's talking about a transfer of wealth;
man, oh man have we seen that! The transfer of wealth is targeted in the Middle East.
Greiner:
Yeah, it really is. The name that we're really utilizing now that we feel very comfortable with is
Noble Drilling. And it's a special situation with a special dividend flow, but, in general, I would
agree that the concept of either the financial stresses easing or oil prices moving to the
downside. We would vote, probably, in favor of oil prices moving to the downside happening
first.
And the key there really has to do with strength in the economies of mainly China and India.
And I think monitoring those strength levels of those economies is probably going to give people
a key on what direction oil prices are going to move over the next three to six months.
Bartiromo:Bill Griffeth, what are the red flags for you? What is it going to be that will indicate for you the
answer to your question: whether or not the credit crunch has seen the worst or oil has peaked?
Griffeth:
Frankly, I don't put much stock in a major development coming out of Jetta over the weekend
there in Saudi Arabia. That would be nice, but I think a lot of countries are frontloading that one
already. The U.S. talking about drilling offshore in the United States, Saudi Arabia increasing its
production, China increasing its prices there domestically. I think the next major move to watch
for: the Federal Reserve meeting on Tuesday and Wednesday. Here we go again, 2:15 Eastern
Time on Wednesday afternoon. Not what the Fed does, but what the Fed says...
Caruso-Cabrera:
Yeah, absolutely.
Griffeth:
...it's view of the economy and, more importantly, inflation.
Turner:
That's right, yeah.
Caruso-Cabrera:
'Cause, Maria, they're in such a bind right here. What do ya do? You worry...
Griffeth:
Yeah.
Caruso-Cabrera:
...about the weakening economy because of high oil, but, at the same time, would you like to try
to bring down high oil by raising interest rates, which would help the dollar.
Bartiromo:
Yes.
Griffeth:
And Bernanke has made it clear: he would like to see this dollar go higher. And we're gonna
have to wait to see if he's gonna try and do something about that at the same time.
Bartiromo:
Bob Turner, do you want to invest on the idea that rates are gonna be going up, maybe at the
end of this year?
Turner:We don't think they're going to go up. We think they???re just going to stay about the same as they
are right here. You know, we're investing more on the premise, as we've discussed, that oil
prices will be going down.
Bartiromo:
All right, we'll leave it there. Thanks, everybody. So appreciate all of your insights.
Greiner:
Thank you.
Bartiromo:
Great conversation there on a tough day on Wall Street.
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