On June 17, Christopher Grisanti, co-founder at Grisanti Capital Management, was interviewed on Bloomberg Television’s “Bloomberg Surveillance.” He discussed his oil investment strategy as crude spikes off due to unrest in Iraq, and talked about the IMF cutting its GDP forecast for the United States.
It’s time to overweight oil, Mr. Grisanti assured at the beginning of the interview.
“What is going on here is, with the terrorist armies coming into northern Iraq, you are driving up the price of Brent. We prefer to play the refiners; we even think this is an opportunity for the airlines because, what we keep an eye on is if this goes too far and wrecks economic growth in the United States. You get Brent at $150 or you get some big terrorist attack. Absent that, I think we are ok here, and this is more opportunity than it is a problem.”
On a related topic, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), talked yesterday about very tepid economic growth for the United States. The IMF cut its forecast for US economic growth, by 0.8 percentage points to 2%. Amongst the reasons behind this slash, Madame Lagarde cited a harsh winter and problems in the housing market.
However, Mr. Grisanti did not seem to buy the IMF scenario for the United States stating that:
“What we are seeing now is a second quarter that is weather-related rebound. But I think that strength will carry into the third and the quarter, and for the first time we may see a 3% growth,” he stated. “The IMF does some wonderful things, but they have a pretty bad record in predicting the next 1-2 years of economic growth. They were very optimistic in 2007, and very pessimistic in 2009, when it turned out that we were emerging slowly. So, we’ll see. But I think they are looking in the rearview mirror,” even though Mrs. Lagarde assured that these were their forward-looking estimates. In fact, he said reaching the end of the program, “the Bernanke-Yellen administration [at the Federal Reserve] are going to have their foot on the pedal until they see 3% growth, and we are getting there.”