Double-dip threat has passed: RJ strategist

Don't worry about a double dip, says Raymond James' chief investment strategist Jeff Saut. “We won't see robust growth, but we're not going into another recession,” Mr. Saut told advisers today in St. Petersburg, Fla., at a meeting for registered investment advisers who hold assets in custody at the firm. Last week, seven of eight economic data releases were above expectations, he said. In addition, “every recession has been [preceded] by a drop-off in casual dining,” Mr. Saut said. “It's the most discretionary thing there is. But the chief executives of [casual restaurants] say there's been no drop-off,” and, in fact, business has grown. “Railroad car loadings are up and freight rates are up,” Mr. Saut added. “These are not the kinds of things you see going into a recession.” The steep yield curve also indicates no slowdown, Mr. Saut said, although he allowed that the short end is being manipulated downward by the Federal Reserve. Stocks look fairly attractive, he said. “March 2009 was the nominal price low” for the down period beginning in 2000, Mr. Saut said. “But I'm not as convinced that we made a valuation low in the last month or two.” He likes emerging markets for their growth potential and U.S. stocks among developed markets. Among sectors, Mr. Saut favors technology, energy, materials, health care and some financials, such as asset management firms. “I've avoided the big banks because I don't understand the balance sheets,” he said. “Japan is profoundly cheap,” Mr. Saut added. “That doesn't mean you'll make money there. But I urge you to look at Japan.” He likes smaller-cap Japanese stocks that pay above-average dividends.