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Citizens chief investment officer Sean Kraus has a rosy outlook for earnings season and thinks it will drive the markets.
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Government spending -- a ballooning debt a weak job market you're up.
All reasons for concern.
Let Y be optimistic about the stock market Sean -- can tell you -- as -- In the -- Sean are you optimistic I'm sending so and why be so.
Well we're cautiously optimistic so we do why there's nothing there talked about his Abby Joseph Cohen used to use that -- like 1015 years ago.
So we're already right now probably when he that I used to describe him -- that is measured.
That.
Clear.
Well you know I I wish I -- in candidate but -- not.
But you know you have to watch those issues but what way you look at is the business cycle.
And the business cycle in general we bottomed.
In terms about it in the US economy in June of 2009.
And that -- business cycle typically lasts about five years or so unless it is messed up and we don't think it's going to be messed up currently.
Because you've got the Fed you've got the ECB and others ready to.
-- basically act.
To allow that business cycle to continue we look at US GDP to be between two and a half and 3% this year.
In that in that environment.
Businesses prosper earnings are good and that's what you're seeing now so far with -- earnings even this quarter.
They did think that earnings will be good enough to satisfy a market that you particularly from.
As October lows is still had a really nice run.
Yeah when you have it over pay out 12% run in the first quarter.
You're due for consolidation or pullback which we have gotten in which we may continue to get through the quarter.
But earnings look to be up to us about 10%.
The street is expecting about 55 and a half percent so we think earnings are gonna be better than expected and that is a driver of the market.
About what that did the tax rates in question at the end of the year.
Do you would you start at least realizing some capital gains now.
In the next few months just in anticipation of you didn't I guess the unknown at the end of the year and terms of the bush and come the bush tax cuts.
They've got the bush tax cuts and then you have the potential cuts in defense spending because of the failed super committee.
So those are issues that are out there and there are definite worries it's a question when the markets will react to them.
So at some point yes you should -- take some profits but.
In a portfolio of stocks you should always be taking profits -- those same sort of run and the valuations are -- that are are too high.
And put money in those names that actually have reasonable valuations.
And the fundamentals are get.
What it -- is thinking about overvalued Scott -- -- Guggenheim partners on the show yesterday said it makes no sense to on treasuries as an investment.
Period stop.
Do you agree with that -- Actually do I mean if you look at treasuries -- got ten year treasuries of just under 2%.
If you look at the S&P 500.
Look at the earnings look at the dividend yield you're getting about nine and a half percent.
That's a big difference so why on treasuries at this point it's an over spot trade.
China's great talk to thank you so much Sean Krause chief investment officer for citizens.
