Market Concerns Fact or Fiction?
CHARLOTTE, N.C. – China’s slow down and plunging oil prices are putting American markets in a down draft, sparking fear about a return to 2008 recession levels. Fear not. John Lynch with Wells Fargo calls this market correction a basic shakeout. He doesn’t see any of the trends that suggest recession. “I’ve never seen a recession when incomes were rising; we had a great jobs report last month and gas prices were falling,” says Lynch.
Oil prices fell to $29 a barrel Friday. Lynch says the market is miscalculating the benefit that will have to consumers. “What that does for the consumer is it results in maybe $350 billion in excess spending in the consumer’s pockets,” he says.
“We really think it’s normal market volatility and correction,” says Chief Wealth Strategist, President and CEO Larry Carroll of Carroll Financial.
Knee jerk reactions to the market never work well, he reminds. Carroll hasn’t looked at this correction as a buying opportunity for his clients—yet. But he says there is attractive oil stock. His advice is to stay with strong companies with strong balance sheets and cash. He says, “I think that if you get to a price that starts with $25, I would be inclined to buy.”
Carroll predicts oil prices will climb back to the $40 range, but we won’t see $100 barrels for a few years. Lynch expects China’s economy to stabilize as it continues to transition from manufacturing to services.