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Says stocks having a rough time today but they are coming back how is this impacting your portfolio joining us now -- more is Margaret Patel wells capital management senior portfolio manager.
Mortgage thanks so much for joining us.
Thanks is would be here.
I don't think you say -- -- -- -- -- -- earnings are sort wanted to start with that you say that a lot of US companies even though this where revenues have declined.
Have managed to maintain our operating margins or even expand them.
How have they done that and and -- -- I mean those -- -- the companies are focusing on right now.
Yes it's really the new paradigm of American business and whether whole call structures become much more flexible.
Outsourcing as part of that.
A lot of what used to be fixed costs are now variable costs.
So they're very -- at reducing costs by global operations and so as -- -- even when companies have lower.
Revenues say in many cases have had higher profits higher.
Operating margins because of this flexibility so it's -- real I think positive attribute of American companies.
-- -- -- -- What do you think the impact is -- gonna be overall positive or negative of this earnings reporting season you know -- he's been in previous quarters really the wind bullish sustaining factor for the US equities landscape.
I think this quarter's going to be mixed.
Because many companies have reported pretty good second quarter earnings because of this margin -- -- advantage that they have.
But on the other hand out when you look at the headwinds the rising dollar of course hurts earnings and also -- and markets.
In Europe in a lot of the developing countries like Brazil like China I think it says they may have some tough sledding but I really think the bottom of the equity market is going to be with the reporting of the second quarter.
And that I expect we'll have such a little more clarity in Europe but then we have our own.
Outcome of what happens to tax policy here and how does that affect the investment backdrop.
There is that.
And then there's also -- of the economy in the US and how much it expands or does not what are you expecting -- our first look at second quarter GDP at the end of this week.
And how does that and what impact your outlook going forward.
It looks very very muted.
-- a little over 1% -- about all we can hope for.
There are some areas of strength cell autos housing looks like it's starting to turn.
Exports have been a pretty good sector for company's capital goods some parts of technology so there's a lot to be encouraged.
But and and again even with low gross rates of say 1%.
Many companies have the ability have earnings that -- much higher than that come maybe mid to high single digits so that's a pretty good backdrop for investments but I don't think -- global for much support in a stronger GDP.
And because of that when you look at the broader landscape for this stock market mark you know -- selloff today 135 down on the data -- the volatility index is spiking again.
What do you see for trends how to characterize the markets my previous guess you Abbas that he just expects marks the slog along right through the duration -- the year what what do you think.
I think quarter -- over the short term in a trading range.
We -- downside pressure because of the uncertainties in Europe.
And did clearly they're building up to a grand climax there where something -- together and I think we'll see that over the next few months.
And then we have to return to US.
Issues -- tax policy.
The treatment of the deficit and that may keep the little cloud but companies that you can control their own destiny by their high cash balances.
Should have the flexibility to -- to this period produce cash flow that I think is.
Much better than the GDP they'll still be masters of their own destiny so -- -- focusing your best -- Well I'm looking more and mortgage companies of our US space that have the majority of their revenues from the US because.
I think that as we go through this period we really have more -- that about any other countries -- like -- and I think we may see our gross rebound.
We have -- -- Very very efficient labor force we now have energy being relatively cheaper thanks to shale gas we have the technological advantage so I think companies based here.
That would include certain -- that would include health care stocks.
Even utilities I think which had been enough kind of mixed sector in in people's minds I think because they still have some -- And companies that have certain niche positions in capital goods it technology I think will be very well positioned even in this very.
Low and -- -- -- -- can't -- take very Patel thanks for coming on.
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