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You look in the front page of the Wall Street Journal this morning US firms emerge stronger are about cost cutting productivity gains.
In this global rebound what does that mean well that's good news for profits is it not Liz MacDonald -- their lives so the question is do you buy -- dip or take profits right now given what we've seen in the Wall Street Journal reporting we've got earning season kicking off tomorrow without cola we've got JPMorgan Chase Wells Fargo later in the -- and Google.
I think the name of the game right now as analysts have been ratcheting down there's -- their earnings expectations expected 10%.
Profit growth for the S&P 500 for this quarter coming down by two thirds right now.
So what -- you know -- -- -- whizzes.
You know yeah year to year in prior quarters the earnings looks great right and you look at the -- -- the earnings that yes the companies are cutting.
You know a lot even out of the muscle of their are there are payroll.
And they're so their profit margins are looking sweeter but that that but the issue is is that do investors have -- memories.
-- earnings -- so -- -- that by analysts have an act Caterpillar could step over it.
You know is a Federal Reserve doing a lot of mood elevator kind of background music.
By giving its own forward guidance on stimulus and whether we'll do that or is -- really just profit growth and profit growth hanging in.
And I think it's -- -- a profit growth is hanging in profit margins are still coming in.
Fairly sweet year to year comparison so there's this time for healthy breather yet you talked -- -- -- like Merrill Lynch.
Morgan Stanley Tobias Levkovich Citigroup says Sutton yeah possibly a breather.
We could see a 5% 7% correction at a healthy -- there is that time to buy.
The markets are still cheap thirteen times earnings vs the average 1618 times earnings historically.
-- you know what -- earnings -- reverend of third quarter.
SB 500 earnings up 18% of the -- earlier appeared fourth quarter.
Earnings up eight point 4% right now we started out the beat expectations were for the first court would be up maybe 10% and now they're thinking -- -- like 3% and then it ended in new quarters they've only 1% earnings growth worry about two to 3% still going up -- harder comparison right.
But also there's some global growth problems got Europe headed to recession not a sign of slowing down.
Right and still you know I mean you look at we took us -- hit and we are taken a hit from the rocky jobs report on Friday.
But the question is was and already priced into the market and yes there are there other concerns weighing like -- handles.
On the market look you know the S&P is still what just coming down off this April 2 high.
The Dow is still get this just 8% off its pre crisis high of October oh sat us right so that's pretty sweet -- so you know what how do you take all of -- how do you play that's that's a question for investors right now in this market.
-- big big name McCain is looking under the hood of the earnings report and finding out what CEOs are thinking going forward that's going to be the name of the game.
And these CEOs still so shaken from the last downturn that they aren't willing to step up and continue hiring is this a one month.
Issue for the job hello get -- -- -- -- it does it does fear alone create a cycle.
Again another down our.
You know that's important question first you appoint in question about jobs you know -- now you know you talk again what does -- talk and his analysts are saying.
We may see productivity growth slowing -- companies because they are hiring.
And then -- be great for consumer demand it be great for the US you know economy because they bring that to meant back into the market if companies are actually hiring and adding to payroll.
Yet we had a bomb that report but that's a great rearview mirror indicator right so -- forward.
That that's -- want to look at under and we look under the hood of the earnings.
Are they going to be hiring down the -- I mean there are saying that while stocks are not yet back.
To the October 07 highs.
Our earnings and revenues for the company the biggest companies are actually up above what they weren't until rose seven yeah Arnold said today yeah that's right and explain something did that in real -- this thing that I like to look at is a profit margin growth and they were Isis gets a slowdown a profit.
But profit margins again are still hanging and even before last week's calamitous you know.
You know knock off from the what we're seeing now in the markets right now profit margins are still going to be hanging and that's what I like to look at is they CEOs expectations for profit markets so that when growth comes back in their leaner and ready cap yeah -- -- that with the -- nice.
Who's about -- eventually want that's exactly right and possibly do things like spend more capital expenses and -- strategists are incredibly low end and then the bond market still very friendly as if.
Yeah -- -- but I tell you something you know the federated that the markets though are still hang hung up too much what the Federal Reserve is going to do.
Against giving forward guidance on whether they're coming to do.
Stimulus but yeah I mean -- but -- treasuries and get to be taken to the woodshed.
As they have been and other Ben Bernanke can say I told you so much talent and it was weaker out there than you thought it was -- so but did so that -- -- amazing stat that you know that the nearest Federal Reserve.
Bought 61% of treasuries last year and that's what I'm asking fiscal problems here -- -- states.
Right now that's the debate.
Great to talk to you always have my style loans there.
Thinking eat the Bonnie.
Popular model is they're -- thank.
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