Kevin McCormally: I am Kevin McCormally of Kiplinger's, I am here with Manny Schiffres, the Executive Editor of Kiplinger's Personal Finance Magazine, to talk about the stock market outlook for the rest of the year. Manny, it's been a rocky start for 2008, what does Kiplinger see for the rest of the year.
Manny Schiffres: Well, we think the latter part of 2008 will be better than the first part and we expect the markets to end up in the black by the end of year.
Kevin McCormally: We are going in the middle of the recession most people think, why are you so optimistic?
Manny Schiffres: Well, for few reasons. First of all, actions taken by the Federal Reserve, the Congress, the administration are likely to soften the impact of the recession. The Federal Reserve, as you know, has reduced interests rate and it's taking other steps to ease the credit crunch which is one of the major reasons behind the downturn in both of the economy and the stock market. In addition, there is a ton of cash, something like $3.5 trillion in money market funds that is waiting on the sidelines and it could be fuel for a stock market recovery.
Kevin McCormally: Anything else?
Manny Schiffres: Yes, it's important to remember that the stock market tends to anticipate the future typically six to nine months in advance. So, unless we are in a prolong and severe recession, we are probably near the end of the down market that began in October 2007.
Kevin McCormally: Okay Manny, if that's the case, what kind of stock should people be looking at right now?
Manny Schiffres: Given the fact that the economy recovery is still going to be a tepid one and given that the stock market is likely to be volatile, we will suggest that investors look for high-quality Blue Chip companies that are expected to generate decent earnings growth, they have exposure to overseas economies and have strong balance sheets.
Kevin McCormally: Okay Manny, have you got some names for me?
Manny Schiffres: Well, examples of those will be IBM, Exxon Mobil, and PepsiCo.
Kevin McCormally: Thank you, Manny.
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