Meeting

Report

 
JOHN LYNCH
Chief Investment Strategist Wachovia
by Matt Joyner
             
"The fundamentals are good, just no longer great," said John Lynch, Managing Director and Chief Investment Strategist for Wachovia in his presentation to Charlotte Rotary regarding the U.S. economy and markets. Lynch said that in his opinion the economy is going through a classic transition from recovery to expansion and in the swirling whirlwind of conflicting opinions out there it is important to retain perspective and see beyond the sensationalist bad news touted by the round-the-clock press.
 
Lynch noted that both consumer debt and consumer assets are at record levels. Likewise, while in eight of the last 10 months payroll growth did not match forecast, the unemployment rate has fallen from 6.4% to 5.2%, an all time record of Americans working. "Things are slowing down, but we're not falling off a cliff," said Lynch.
 
Lynch stressed three points in his presentation. First, that while growth is moderating, it is still growth. He said Wachovia is now estimating a 3 to 3.5% overall growth rate and a capital investment rate of 8% over the next six quarters.
 
Second, like a driver taking his foot off the gas but not putting it on the brake, the Federal Reserve can be seen as being "less stimulative" rather than more restrictive with interest rates. He said the Fed is seeking to "renormalize" interest rates up from 1% of 2003-04 and he predicts the Fed will go up to 3.5% this summer. He said the Fed is keeping its eye on labor rates -- 70% of business costs-- rather than oil prices.
 
Third, Lynch said that market growth in 2005 and 2006 will approach profit growth as investors will be increasingly unwilling to pay higher PE multiples in an atmosphere of expected interest rate increases. Commenting upon his reliance upon ranges in his estimates, Lynch said that he would rather be, "vaguely correct than precisely wrong." He exhorted the audience to read past the headlines and lead paragraphs and find the balance in the financial story, frequently found in paragraphs six, seven and eight.
 
A 42 year old father of two boys, Lynch worked for 10 years on Wall Street with Payne, Webber and Morgan, Stanley before joining Johnson Lane Wachovia in 1996 and moving to Charlotte. He was introduced to Charlotte Rotary by John Armistead of Wachovia Securities.
     
Head Table:
Benton Bragg, Meg McElwain, Catherine Browning, John Armistead, Mike Parrott, Paul Schmidt
                
Visitors and Guests:
Jeff Triplette; Health & Happiness: Don Steger; Invocation: Jody Morris; Song: Thomas Moore
 
        

NEW MEMBER PROFILE
	Carlos E. Sanchez BellSouth Telecommunications 300 S. Brevard St, Ste 15G (28202) 704-417-7622 carlos.e.sanchez@bellsouth.com
Carlos E. Sanchez is Director of Regulatory and External Affairs for BellSouth Telecommunications in Mecklenburg County. Mr. Sanchez is responsible for coordinating BellSouth's efforts in support of the civic, business and government organizations in our community. Previously, he was part of the Small Business/Outbound Sales Division for North and South Carolina. Carlos has lived in Charlotte for seven years and formerly worked as Regional Sales Director for BTI. He also worked for Intermedia Communications as a Group Leader in Charlotte. Before moving to Charlotte, he was Executive Vice President and part owner of Kisa International S.A., a telecommunications technology integrator and service provider with main offices in Colombia, South America. He also lived in New York City where he owned and operated a local cable television station from 1989 to 1992. Before moving to New York he worked with his family producing a weekly travel television program that aired in The Travel Channel and the Telemundo Network for 5 years. Mr. Sanchez is very active in the local Hispanic community and business community at-large. He is Chairman of the Latin American Chamber of Commerce of Charlotte. He is active with the Leadership Team Board at Collinswood Bilingual Language Academy. Carlos was appointed Jury Commissioner for the 26th Judicial District in Mecklenburg County in 2003. This appointment is for two years. Additionally, he is participating in the Leadership Development Initiative Class for 2004/2005 as part of the Community Building Initiative program in Charlotte. Mr. Sanchez is host for "Charlotte Hoy", a community affairs television program produced by the local PBS station, WTVI Channel 42. This Spanish language program airs on Sundays at 11:00 AM. Carlos has a B.A. in International Relations and Political Science from Florida International University. He is a native of Bogata, Columbia and is married to Diana S. Kielland. They have two children, Felipe who is 8 years old and Daniel who is 7 years old.

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