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Barron’s Online Stocks Editor Bob O’Brien on the outlook for the markets and the economy.
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Joining me now is Bob O'Brien stocks editor for parents on line.
The ball well I think -- Melissa we have a yet we had a dreadful week but keep in mind saying this is the worst week of 2012.
He's really saying well we haven't had any any hiccups in the market up until this point we -- twelve straight weeks of solid gains so.
Now we're at the worst period the that we been -- since.
November of last year but really it's the first -- -- first -- we -- does that make you even more nervous -- that -- differ breather as we did have such a steep and that's first quarter know I'll tell you why analysts I think that did investors have been waiting have been watching.
On this rally take off and a lot of them stayed on the sidelines and said.
-- -- the markets have pulled back a little bit I'm gonna take advantage of the better entry price and I'm going to jump into the market so.
I think -- think they're really gonna do either possess for the big knock on the rally was at the doesn't wasn't -- up volume behind it.
-- there aren't enough retail investors about the volume has picked up this week I mean there's a little more conviction.
On the downside which is very typical of the market we've also seen volatility increase substantially -- up to about twenty from thirteen.
-- we've also seen.
A real turn in investor sentiment -- the folks that are entering the surveys.
Are decidedly decidedly after a three month period where they were getting remarkably bullish at least in the answers they would -- -- -- these surveys.
Even if they weren't necessarily committing capital of the market.
Now all of a sudden we've got.
Bearishness -- outweighing the historical average of bullishness.
Well below that historic average and a real change in in investor certain sentiment in just the span of -- so what does that tell you.
Well I think it -- with it I think it tells you that it's a lagging indicator -- About individual investors are always the ones that -- at the top -- markets.
In you know there and -- you see that as a good thing.
A little bit that there's so much bearishness I do I think -- I.
It's a contrary indicator.
Let's talk about some of the -- across all along the way earnings season obviously you know big deal right now FactSet saying of the 32 companies that that -- report that's not many but still.
75% -- -- earnings per share -- 84% in revenue estimates.
It was pretty good week for earnings do you think that this is only because the bar has been set so low a lot of companies ratcheting back their expectations.
For a lot of analysts ratcheting back their expectations for the quarter do you think it's going to be a better quarter than expected legitimately.
Well I think -- legitimately be a better better quarter than expected but you're right the -- have been set pretty low I mean right now we're looking at EPS growth.
Of about 1% which would be -- lowest that we've seen in nine quarters so.
You know the plus side it is when you set the bar that while it's going to be pretty easy hurdle late and I think investors are gonna look at the numbers and say.
Oh -- they beat their expectations by.
X-Factor in and you know Betts and -- encouraging.
On the other hand.
I think you -- it's clear that we've got to start getting we're we're no longer going to be -- a little ring.
Corporate profitability at a just cost cuts when I can be -- -- more people walk.
When I could be able look -- for ordering new equipment it's gonna have to come from organic growth of sales.
So far the signs are encouraging but you know we've had -- Google JPMorgan I mean these are not exactly Bellwether.
And how many do that when you have so many people that are still unemployed when you see you need organic growth in sales.
Are there really people out there to behind they're still so many people that are unemployed they're worried about their mortgages and that's -- well I think it did.
You know that the average household has done a pretty good job of -- setting.
Exactly what their balance sheet looks like individually.
They've cut their they've cut their -- -- they've increased their savings and I think there's an opportunity now I think there's a measure could peak on the part of consumers and I hear.
Now I'll just constantly saying no to themselves.
And I think an expense you know and they've got a car in the -- -- that's probably ten or eleven years old.
They're gonna at some point they're gonna have to say and what we really are gonna have to get the new Toyota so you know I think there's a pent up.
Wellspring of demand a little bit of encouraging economic data is going to unleash that the powerful way.
Statistically if you had to make a -- Stay in May and sell in May and go away.
Do you think that's a winning strategy this year last year would've worked everyone -- sort of kicking themselves -- September rolled around what do you think if you had to -- now I mean I don't think so I don't I don't think it works I don't think the same tactics work year after year -- there -- -- Bob O'Brien thanks so -- had a great weekend.
