Markets Remain Weak

LOU DOBBS: For the week, the Dow down nearly 3.5 percent. The Nasdaq fell 5 percent. The S&P dropped 4 percent. Not a good week. I'm joined now by Jan Hopkins, Lakshman Achuthan, Ed Yardeni and Christine Romans. Let's begin with you, Jan. Where are we?

JAN HOPKINS, CNN FINANCIAL CORRESPONDENT: Well, do you want to go back to last night and talk about Intel shares?

DOBBS: We'll go forward by going back, sure. That's right.

HOPKINS: We were talking about this last night. The decline in Intel shares after the close of Dow yesterday.

DOBBS: I said it looked like a rigged game to me, since the beginning of the year.

HOPKINS: Right. And we looked at the situation, and it looks like you really have a point, Lou. And that is, if you take a look at the Philadelphia semiconductor index, you can see great volatility in the Intel shares. And that's exactly what you were talking about. What it turns out, is that through the year Intel has become more and more negative about its own outlook. And yet Wall Street analysts are not negative. In fact, as of yesterday, 17 out of 24 Wall Street analysts had buys or strong buys on that stock. So if you had followed the advice of the Wall Street analysts and had been buying as they were reiterating their buys, because they remained bullish, you'd be underwater at this point.

DOBBS: And many of those analysts were on occasion and rather regularly reminding investors they should be buying.

HOPKINS: That's right. They were.

DOBBS: And it's -- I mean, that's amazing. Still, after everything it's gone through, to see this kind of performance. Are you shocked by that, Ed?

EDWARD YARDENI, PRUDENTIAL: Well, you know, not really, because there's just been an obsession with technology on Wall Street and on Main Street, too. And I think we're getting over that obsession, as we can see.

DOBBS: Sounds like a cure to me.

YARDENI: Absolutely. I can sort of tell that, because the market has been selling off and technology has been selling off, and nobody is using the C word, capitulation. But that's really what's going on here.

So investors are getting fed up. And they're getting fed up with the analysts. The analysts just haven't been on the planet earth, many of them, when it comes to realizing that technology is a growth cyclical. It faces a tremendous amount of competition. And some of these great technologies just become commodities. Remember, a calculator was a high-tech instrument for about six months.

DOBBS: That's a great point and a great way to say that. In terms of the market, moving broader beyond technology, what is your sense of this market? We continue to -- these are rather large moves on a weekly basis. What should an investor be doing?

YARDENI: I think investors are probably getting a little too pessimistic here, having said what I just said about technology. Earnings are actually going to make a nice comeback this year. Your seeing it in a lot of economic indicators that have always worked in the past, like the purchasing managers, the Institute for Supply and Management. Their surveys are looking very strong. Pricing is coming back in some areas. And so I think what will happen here is we'll have a very pessimistic, dour attitude. And then the profits numbers will actually come through pretty good in the second half of the year. And that will help. I'm not trying to be a cheerleader here and tell you that the market is going to go straight up. But I think there's too much pessimism building up right now.

DOBBS: Is that the sense you have over at the Exchange?

CHRISTINE ROMANS, CNN FINANCIAL NEWS: The word I keep hearing is "despair." And it's interesting, you bring up capitulation. We're at despair. We're not at capitulation yet. Volume was good today.

YARDENI: Isn't despair beyond capitulation? (LAUGHTER)

ROMANS: Well, I don't know. I think we despair, and then we capitulate. And then everybody is happy and all the bad news is washed out and the market can go higher. That's the way it's supposed to work, I guess. But volume was good today, Lou. Almost 1.8 billion. We haven't seen that in so long.

DOBBS: Christine gets very excited about volume.

ROMANS: I do. No, I really do. Because that means somebody's in there buying and selling stocks.

DOBBS: Unfortunately today there was a lot of selling to go with that buying.

ROMANS: But did you see, the low on the Dow was down 152. It came back positive, closed down 30-some points. If you didn't have IBM and Intel in the Dow, it would have been positive.

DOBBS: And that takes care of 30 stocks.

ROMANS: Well, the rest of them had a terrible week. I'll give you that.

DOBBS: Lakshman, your thoughts?

LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: I'll just pick up on the Intel discussion here. The reason, From the economy point of view -- which is all I'll talk about -- they were saying that they had a lot of weakness in Europe. And that is part of this uneven recovery. We are not having a perfect recovery and the market was kind of priced for one and expecting one. We're having an uneven, unsynchronized recovery. The U.S. is recovering very clearly. Japan is now starting to recover. Europe is still on its back. Germany is still in a recession. And the Intel comments point to that.

DOBBS: And where are we in terms of the recovery?

ACHUTHAN: I think we are right on track in the U.S. It's a subpar recovery but it's a sustained recovery. The unemployment rate is a lagging indicator. It usually doesn't go down until well after the recovery has begun. And that would be consistent with what we think has been going on, a recovery since the beginning of the year. As it spreads to employment, that's a more healthy recovery. It's more pervasive.

DOBBS: Ed, do you see it that way?

YARDENI: Well, it's only subpar because there wasn't much of a recession last year. I mean, housing activity has been booming. I think we're just seeing the beginnings of a housing bubble. I mean, home prices are up 9 percent from a year ago. Mortgage money is readily available. So I think we've got a great economy. And I agree, I think the global economy is looking better, particularly in Asia. I think you're going to see better activity out of Europe. People just aren't buying PCs all around the world right now.

HOPKINS: People are putting money into houses instead of into the stock market. That's part of what's going on. That's part of the reason why housing prices are high.

YARDENI: And anything housing related has done well in the market.

ACHUTHAN: And as jobs go better, confidence goes better.

DOBBS: You get the last word.

ROMANS: And somebody told me he's bullish on (UNINTELLIGIBLE). It's the only thing that keeps going up.

DOBBS: We'll end with that. And we thank you all. And it is an interesting market. That's going to be my analysis and forecast.