Equities to see huge volatility in near-term: Newedge Group

Here is a verbatim transcript of the exclusive interview with Kirby Daley on CNBC-TV18. Also watch the accompanying video.

Q: Is this just a retracement or you think a big correction--that you have been talking about the last month or two--has begun in right earnest?
A: I do think it has begun but that doesn't mean that I have confidence it is going to correct fully in a straight line down either in the commodities or the equities market. We are going to see a lot of volatility and a lot of fighting on the way down, especially, during the earnings season here in the US and around the world for equities.

Commodities is a very interesting bellwether to watch. I think we are going to see a lot of speculative fluff come out of some of those markets and we will see how much stock piling China wants to continue to talk about or actually enact and those markets will settle as well but it will be a bit of bumpy ride.

To answer your question, yes we are in the beginning process of a very long and downward adjustment in both commodity and equity markets.

Q: There are a lot of people who believe that a new up-trend has started? Do you think they will buy this first dip in the market and that is why you are saying that the fall maybe punctuated with rallies as that buying comes in?
A: Yes absolutely. I have never seen such a dichotomy of views in my more than 20 year career--investors and analysts truly believing their view. And the views being so diametrically opposed that we are in a bear market rally, and that we will see new lows in both economic and market numbers. Those who believe that this is the start of real new rally, economic recovery and that this is a minor pullback there is no middle ground here. It seems that there is a true dichotomy and that is a recipe for volatility. So, just as you said, there are many investors who are seeing this pullback as a buying opportunity and I believe that will cause the downtrend to be slow and choppy. But when the economic fundamentals come to bear and the earnings feel the brunt of the economic fundamentals coming into Q4-2009, Q1-2010 that is when the downtrend will win out over those who believed and will start to see the true situation for what it is.

Continued on next page...