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Harris Private Bank CIO Jack Ablin breaks down how Europeans debt problems impact domestic markets, and whether consumers need to prepare for a double...
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And our next guest says that this is just the beginning of Europe's fiscal problems joining us now is Jack Kaplan Harris private bank executive by vice president.
And chief investment officer Jack this -- side in the markets continues to be driven by what happens in Europe today.
A German finance minister threw cold water on the entire notion that we're gonna get a -- stakes out of year at.
So let me pose you this question are we -- delaying the inevitable just Greece does need to sort of and call called bank wrapped -- mean and then it's an amended tissues and then move on with that.
Well I think that's where it our best for the markets headed to and some -- question then is.
-- -- how does how does that -- the European Union respond.
And clearly we want to see.
A little more of of a market pricing of -- those holdings would like to see.
A better fair assessment of the banking system and I think the best we can hope for now is to have solutions that may put.
You know forestall things out a couple of years.
And you know allow allow that the market to kind of turn their attention -- other matters but.
As long as this is circulating the headlines I think I'm this is this is going to be central focus of most investors were.
These aren't the theme that is plaguing our governments and and are are really our our attack in our philosophy of how we're handling our debt crisis not just in Europe and around the world aren't we delaying the inevitable.
Putting up short term gains for long term -- I mean shouldn't we.
Really tackle the problems in is Europe early tracking tackling the problems right now.
Yeah I mean I think unfortunately it's it's probably human nature to not address issues until were confronted we are right on our doorstep.
And so I don't think that's anything unusual -- if you go back and look at.
Congressional.
Approval ratings which sounds like an oxymoron but.
Really they do tend to spike around crises when both sides of congress and the president can.
What that means for the markets is remain some crises to move this ball forward and crises generally don't sit well we -- about the investment markets.
-- I get it a exacted that's the case some real nervous because it feels like we've been a nonstop prices for about three or four years right now.
Let's talk about the notion of a double dip recession word is that that right now.
Yeah I mean I think it's beyond my view it's a coin flip -- either way Charles we're looking at nothing that's clear until deep.
On the downside.
But unfortunately even if we were to avoid a double dip.
We're not looking at anything accelerating too much on the upside either so you know I'm gonna say we're gonna be plus or minus probably 11 and a half percent either way.
Which means that yeah I it seems like a daunting prospect of about of appointment for up a recession but on the other hand it's really gonna be -- to the downside or or parties shall it be upside to it.
Having said that -- it can the stock market go up.
Even if we had a worst case scenario you know a lot of times people connect okay double dip recession market down but -- back -- the markets still go higher.
Yeah I would say Charles it would have a hard time going higher if we do slip into recession just because.
Earnings nowadays are so -- -- to sales which would be a great thing if we -- -- Sales growth to increase.
But if if the revenues -- say by 5% year every year.
We could see you know twenty to 30% decline in earnings which we saw to the upside back in 2009.
So.
You know that's that that kind of leverage were looking at.
And I would say Charles if we did you know slip in a recession we saw your beer sales declines.
It would still be hard pressed for the market to to make strong advances and Jackie -- great do's and don'ts for our viewers out there are -- this or that.
-- so I think the the you do lose I would I would focus on -- kind of the reflation story obvious is that the notion that.
You know yeah inflation's out there we just don't know exactly one it's going to come so you wanna make sure that as your generating income from -- Portfolio to be cognizant of the potential for inflation.
The other is just you know this is a roller coaster markets are you really have to be.
Active in managing your overall risk that means having -- potentially raise cash if need be and and and move forward.
And then and then lastly you know I think that anyone who relies on fixed rate.
Fixed income securities.
It is generating income to meet their lifestyle.
Is gonna find themselves losing their standard of living over time as expenses are gonna outpace high quality.
Fixed income for a little while -- of how that's part of the grand scans it asks scam as part of the grand scheme of paying back our government debt with cheaper dollars.
Freudian slip there exact -- like -- yeah.
Due out on -- Harris private bank chief investment officer thanks for being.
