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U.S. Trust President Keith Banks on the outlook for the U.S. and global economies and how it impacts investors.
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It component of that just a short time ago.
President Obama addressed the nation with a new push to extend tax cuts for all households making less than 250000.
Dollars here's what he set.
Many members of the other party.
Believe that prosperity comes from the top down so that if we spend trillions more on tax cuts.
For the wealthiest Americans that that will somehow unleashed jobs and economic growth.
I disagree.
I think the wrong.
What does this mean if it goes through it's a big if of course because we know.
How about the -- -- against what's happening in congress but what does this mean for you as an investor.
Let's bring in Keith banks he is president of US trust with 333.
Billion in assets.
First what you believe that bad this plan by the president will go through with the house controlled with the Republican could.
-- house yeah it's hard to say -- when we're concentrating on 250000.
Below I think will be a big obstacle for the Republicans -- with the fiscal cliff wounding.
-- -- numbers we believe it could take anywhere from 300 to 500 basis points off of.
GDP growth that -- recession we've got to do something hopefully this is beginning of a dialogue you're not talking specifically about what the president talk about -- -- talk about all of the components of the fiscal -- -- one aspect being was not the bush tax cuts expire and -- part of the whole issue and we're going to be hearing from Gene -- the president's director of the council of -- -- don't need to look at part of the biggest issue and it's creating demand so that companies do better and stocks then -- higher.
Is there a way to invest around this.
Well I think what one needs to do is be cognizant of the fact that there are some real near term pressures on the economy potentially on profits.
So as one puts together -- strategy.
One needs to be thinking about short term vs intermediate term.
We try to counsel our clients to think more intermediate term.
You know how broad based strategy what does that three -- -- three years for us but but in our mind what you need to do that is -- that that longer term view.
And if you trying to add to equities when equities become weak use that opportunity.
And conversely you know the pay when asset closure you're engaged as we know how -- -- Wow that the global economies are now feeling -- all intertwined at this point.
What kind of growth do you see you for the global economy overall.
We're looking at 3% global growth and is composed of about five to 6% from the emerging economies continue to be key driver.
US wanted to have to to.
And in Europe we still think you're looking at least the one to 2% decline in growth at this -- -- -- short certain areas and go long others is that what you look at yes a week we are very favorably disposed.
Won't we -- might equities it'll be in the US -- we like large cap stocks in particular because they're more explosive exposed to global growth.
Where underweight Japan were underweight -- -- we like the emerging economies.
And we we want to start building up positions in equities especially around thirteen hundred earnings.
They start officially today with a kick off with Alcoa after the bell what are you looking for when it comes to the health of the of companies and the window we see into how they're doing.
We feel pretty good about earnings -- an absolute sense what we're worried about Liz is the we think that this street is too high we're looking for 98200.
Dollars for S&P earnings this year.
The -- the consensus is more like a 10708.
With the expectation -- the fourth quarter there's going to be 14%.
Growth.
We think to be more like five to six the vacuum created disappointment we was indicates he's got 333.
Billion dollars -- US -- coming up to give us some specifics on which areas.
He expects to do well and which.
