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Mike Binger, senior portfolio manager for Gradient Investments, on future stimulus and the world economy.
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Even remotely.
And well Fed Chairman Ben Bernanke didn't give any clues about more stimulus as Peter just said but our next -- actually things will be get it anyway before the election.
Joining us now is Mike -- senior portfolio manager at gradient investments.
You know -- you're not alone a lot of people seem to think we're still gonna get this stimulus anyway but why why do we need it.
Well I think it -- that we need -- because of this summer -- ever since really late spring this summer we've seen not only in the US but worldwide.
A slow down and I think it's an air pockets and I think the market has reacted to that.
And I think Ben Bernanke is not gonna do it today.
But he's gonna watch the data slowly deteriorate a little bit and that is gonna pull the trigger.
I think it'll be the measure of last resort and I think you'll need it I think the economy wants -- I think all the powers to be wants and he knows that and that's why I think it's coming.
But my -- as mister Bernanke said we're -- stuck in the mud you know as as Tracy also said -- is just not bad enough industrial production up today the building numbers.
In the housing industry not bad I mean it's not enough -- instantly say OK QE3 is coming next week isn't.
-- -- -- -- -- -- absolutely right we're in this dilemma right now where.
The economic data we got to remember that the market is up almost 8% this year and GDP is plugging along -- 2% so that's not dismal at all.
But the fact -- were deteriorating the fact that Europe where our multinational companies.
-- it's a big market for them.
That's deteriorating fast China slowing down a little bit so these are all markets that the US economy serves -- -- -- goods and services to.
And if we see declines there in the US a Benchley I think the trigger will have to be -- to stimulate the economy.
Get the get the people in the economy often deflation and back -- -- 2% inflation target.
But it doesn't fix the problem right -- the problem now is I think people are more worried about the getting their money back returning capital as opposed to the return on their capital and someone much smarter said that -- me I didn't make that up.
That's a people are worried about right I know that I had capital preservation not appreciation.
And until you get people to start to think about appreciation again no is willing to take risk.
Well I would say that people are worried about capital appreciation right now and that's why you've seen stocks do well.
Look at the alternative I can put my money to work with the US government for ten years and I get the privilege of -- one point 5% done that every year for ten years.
I think there's no better alternative right now than stocks and in that arena -- specially dividend paying stocks I think they pay you a much higher rate than treasuries.
I think there -- solid and stable companies they're multinational nature of the big believer in them in the multi national economies especially emerging markets.
And I believe the alternative other than stocks is really -- right now and that's going to be the market to go to especially as we progress towards the end of the year.
-- you say we'll see the a year end -- had driven by corporate profits that much of the guidance I've seen in the second quarter earnings report suggests otherwise have you reconcile that.
I totally agree with -- second quarter.
And third quarter we're not giving great guidance when we're seeing that in the numbers and where they're going right now we're seeing about one or 2%.
Year over year growth in -- Q2 and the third quarter.
But if we look out towards the fourth quarter I believe earnings will start to accelerate year over year again and I believe we can approach double digit earnings growth -- 2013.
And I believe that stocks eventually follow earnings and there's been a disconnect from that for the past year.
And that the market will catch up to where the earnings power of corporate America really is right now.
My -- thanks so much for sharing your thoughts.
Thank you are.
