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United Capital CEO Joe Duran and Fort Pitt Capital Group CIO Charlie Smith on Alcoa’s second-quarter earnings results and the outlook for the market...
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Charlie Smith principal in chief investment officer fort Pitt capital group.
Along with -- -- -- CEO and founding partner of United Capital we'll get to your opinion on the markets in the second gentlemen but let me start with Joseph.
Looking at -- Sometimes touching quarters where they'd -- and they did really well and it extended.
For the markets it did really well at at a very salute Prius affect.
-- DC at this time or is this not that strong a report I mean it's a beat but do you believe it.
Yeah I do believe it and I think it is quite quite good for the rest -- market as well because.
That's remember a quarter ago -- was when we first got wind of the European mess reigniting.
And that was kind of -- but for the rest the market to that they also at that time most companies are just that they European projections -- -- they've priced into the future already.
What we -- with this report is that it hasn't gotten less.
At but the market has adjusted downward -- -- in particular has -- 50% of the last twelve months so what you've seen as that we priced in a slowdown.
I think what they're saying -- it hasn't gotten less and that's a very good sign because.
It's a lot of anecdotal evidence that suggests the US -- start to slow a little bit low and that China has really slowed down and and if they're telling you that's not the case.
Have every opportunity to do it and it probably wouldn't hurt the stock that -- because it's a very key support levels has sought.
I think it is at least a great way to -- cut off.
A lot of haven't been the other -- -- that this.
We'll see how the rest of the season does not Charlie let me ask you look I certainly Alcoa appearing more bullish than we expected in Q3 Q -- Which really plays into what you're saying you see a nice rally.
At the end of the what are you basing that well let me get your thoughts first on a -- Alcoa and then why do you see a rally towards the end of the -- Well as far as -- cause concern -- -- -- markets managed to move the -- like to Wear the dart hit the wall and I really don't really think that's characteristic of -- I really don't think it's characteristic of any fundamental strength and Alcoa at all -- made these same basic comments back in April.
I really don't have a lot I don't think you really have a lot of credibility here.
You know -- prices fell 9% between the first and second quarter they're down here again beginning the third quarter.
I think it really is is you know that the that will wait and see whether he can you know produce the results that he's talked about basically for the past year.
If if they expect.
Unit demand to be up 7% I believe -- up prices prices have already fallen 9% this year and they're they're -- fallen some more here in the third quarter.
-- wipe out any increase in in unit demand pretty -- Right okay so let's get back to the second part of asked this question and and we'll take this to you first Charlie and that should show.
Do you -- you believe there's a rally coming what will inspire that -- market at the end.
Well I think it's gonna be late in the year in Ireland aid if frankly they'll be driven by politics.
I think if we do get a yeah -- election win.
We could see a did -- a bounce in the marketplace because I think capital's really been on strike now for.
For most of the Obama administration.
That's not the way that the media really characterizes that but I think that really is the case and we get a new administration that there will be some capital that comes off.
The sidelines.
So let me throw that -- you do you feel excited that volatility that we might then see a rally -- we have to wait for Santa clauses that call it.
That o'clock guy thinks I think we have a lot of -- -- and I'm not sure it matters as much to winds as long as we have some clarity I think.
The uncertainties the big question and what we might see is that they just extend.
The bush tax cuts for another two years and that would be -- good enough reason -- right now that tax implications of the coming change and no one knowing what the rules are going to be.
Is a huge issue the second big issue is -- consumer as the average investor is on the sidelines that we speak to these people every day they're very concerned.
And all that the fear that's out there -- stopping them from buying equities and that is the underlying surge that we had.
Ten years ago was driven by average people really owning stocks and what we've seen is the reverse as your previous -- mentioned half a trillion dollars taken out.
The last few years and that isn't changing immediately but we did think.
The ground is made -- good news is already out there and that is a possibility once we have some clarity as to who might win.
Which I think will be -- later in the fall.
That will will actually -- -- that the ground work for a very nice recovery at the end of the aftermath of the market's collapse and the said even though it doesn't feel like it.
Buster Libby had go to Charlie for the last question Joseph mentioned clients what are you telling your clients right now Charlie you're how do you play that's.
Well year -- yield is Paramount.
You know we expect annualized total return for the average stock for the S&P the around 7%.
And you can get almost half of that in dividend yield our portfolio as a dividend yield north of 3%.
We can get that nice healthy yield about a big component of your total return in dividend yield you need to focus on large cap US businesses -- that -- -- nice dividends.
Okay thank you -- -- -- very much Charlie Smith and Joseph --
