You're watching...
Mike Santoli, Barron's associate editor, on the recent market volatility and chances of a second recession.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
And what chaos in the markets sparking fears in investors as the Dow climbs of falls more than 400 points in a row that's four days in a -- up or down 400 points -- associate editor Mike -- joins us now Mike.
I'm gonna borrow the word debt -- the -- used to stabilize stabilization.
Do you sense that maybe we're getting to that.
-- yeah I think were -- probably gonna stop.
Timberlake and that's kind of the way I look at these markets and you have the heart attack and and you kind of have to arrhythmia after that I do think that you should have reason.
To sort of calm things got to me if over the weekend in early next week if spot.
The European Central Bank can convey any sense that they're kind of not behind the curve as they've been by most -- people's perception recently about their debt crisis there I do think you can have stabilization.
I think the market's -- real long way to pricing in not just in economic slowdown but something like.
Near recession.
That type environment right now so -- do think that we're we're kind of a long way there.
There's a big difference between a slowdown in our -- and -- so which when you think that we are in or headed towards.
I do think that it's right now slowdown I mean I think the retail sales numbers that came out today showed that it wasn't like a free fall in economic activity in the last month of two.
Job now.
The thing is you never in real time kind of no one recession hits in the consumer sentiment numbers horrible today.
Based on mostly the headlines I think so I do think.
But we haven't priced in a recession because usually recession you're gonna get a fifteen to 20% decline in corporate earnings I don't think the markets priced for that right now even though markets not expensive.
I feel like that whole process of revising lower the corporate profit I think would not.
Sit well with investors but I do think right now if it's just slow down in the market is probably priced appropriately.
In my queries I love your workers -- bridge the gap some time to between fundamental analysis and also the intangibles stuff.
Now you're OK you're saying no recession right now we do have something that into a growth -- -- -- the crux of the problem is a confidence -- confidence recession.
How does the market -- work its way through something like that.
Very difficult to really -- that you're right it's it seems as if it's confidence on the you know business executive side investor side consumer side so really you have people who are.
Pulling back from risk out one thing I was looking at today is that the the asset level in the mean.
Treasury bond long term treasury bond.
Exchange traded fund.
Was about 90%.
Of the asset level in the S&P 500 spiders SPY.
That's amazing that's like get that's really anatomy in that interview people are very risk averse they're hiding in very safe assets.
And so my instinct is to say you know people are a little bit too scared right now.
In terms and investors.
But it's it's very difficult because of fourteen I think we have this muscle memory of 2008 credit active right now in and away even when it look like the market was overdone a downside even -- -- look like we've priced in advance scenario.
It got worse.
How do we know when to dip our toes and here I -- I eat in like you said your point people are very scared here but nobody wants to take the lead and then get burn center at what point what metrics we need to be looking at and saying hey I should be actually buying on us.
I think the greatest advantage that individual investors have is they don't.
Have to worry about beating the index they have they can have a longer term time horizon than the average professional which is well less than a year right now professional investors are paid.
Perform -- and your your basis.
40% of stocks the -- 500 have dividend yields at some point this week higher than the ten year US treasury.
So that tells you that they're paying you to wait a little bit here and I think if you have three years you can look for those.
Those companies that have that sustainable.
Dividend yield in and obviously decent growth outlook and if you don't have to worry about what the stock was down 10% your face you're all set.
Mike I say amen to that and I really hope the viewers are listening to you.
They don't have to beat the market data day so stop being whipsawed by that bites and telling us why you wanna desperation these.
-- technology stocks and in Iraq.
