GAIL P. SENECA
Seneca Capital Management LLC
Assets under management: $15.1 billion
GDP: 2% to 2.5%
S&P 500: 1265 to 1325
NASDAQ: 2200 to 2300
Hot sectors: health care and technology
Stock picks: Baxter International, Biovail, Jabil Circuit, Intel, Furniture Brands International
Gail Seneca thinks the economy already has turned the corner: "We think the recovery actually is under way as we speak."
The reason? Inventories have been drawn down to low levels, driving businesses to ramp up production - even in autos, where promotions helped rack up huge sales in the fourth quarter. The challenge now "is for companies to produce profitability in a world of pretty competitive pricing."
Ms. Seneca thinks gross domestic product figures for the first half of 2002 will be deceptively strong, as a result of the sharp retraction after the Sept. 11 terrorist attack. While she thinks the economy might perk up by 2.5% to 3% in the first half, she would be happy if the growth rate hits 2% to 2.5% for the entire year.
While the economy should bounce back quickly, it might take a while longer for the stock market to rebound beyond its current levels, as interest rates remain low and until demonstrable earnings growth surfaces. Ms. Seneca thinks certain health care and technology stocks will prosper. Tech and telecom stocks have fallen so much they should provide a nice snapback.