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The Haverford Trust Company CIO Hank Smith and TrimTabs Investment Research CEO Charles Biderman on the outlook for the markets.
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So the question is -- we -- -- a rally all the stops spinning.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- And for the bears we've got Charles Biederman trim tabs investment research founder and CEO.
Hank.
The vick's that we bottom for this in the last hour about what the new fear index is because the -- is it's got its arms back it's on on -- pool wrapped up not sipping margaritas at like nine umbrellas in -- nobody.
A concern that.
What's going on with these markets and is that why you are bullish and do you trust that index to guide you in the right way.
Well look -- certainly sentiment is much more reflective of a market low that it is a market talk when you look at what.
Investors are doing their parking money cash that's earning no returns they're taking money out of equity funds put into bond funds that have.
Potentially a negative real return.
That is more indicative all of fear that is pervasive and much more reflective of a low in the market not a top in the market.
-- Charles -- the the bad here.
What do your own reasons for that I don't know I -- felt that suddenly be Hank wasn't as bullish -- I thought he would people what's your take on the bad side.
We'll have been a lot of the fear IC is by insiders insider selling.
Since the draw he announcement on July 25 has spiked.
So you have an -- announcement -- them.
Clinton while the PR announcement -- -- well listen.
The markets going up on promises not action it's promises that the Bernanke put.
It's now grown wings and has become the -- he put as well.
I mean that's the only bullish thing for the markets you have economies.
That are -- -- weakening.
Today's.
Retail sales report was the biggest joke I've ever seen.
One it's a small survey.
Two they reversed the seasonal adjustment they added sales this year at last year they subtracted sales seasonally adjusted the only way they got.
A nine tenths of 1%.
Gain was by seasonal by fudging the numbers -- there's no reason on the report why did the Charlotte usual about Charles.
You know I adore you we go way back but you're fighting the tape I mean Dow NASDAQ S&P all of Russell 2000 up double digit percentages over the past year.
And you could make all those same bearish arguments but I don't you're Smart enough though -- still try to make money what are you buying into at this point -- people who can.
Who listen to you.
Well actually believe it or not so it's the end of may where actually change because I do want apple I do own Salesforce.com.
I do on whole foods.
I do -- -- test flow treaty to get the best little exchange traded fund no one was about what what will what's the ticker symbol for that.
CT FS CTF -- -- peck on the most of the of the portfolio manager I have to admit of course.
And also short -- Europe the big banks and the emerging markets.
You know that the bottom line is yes the market has been up but we still haven't taken out the April high.
You know can the market continue on.
Totally unsupported by reality.
On a move up -- -- promises that.
I trust BI will save the Euro.
-- -- you know at the European economies are not growing they're shrinking there's no money being generated to pay.
Government services past -- none of that and -- can't grow the way it's structured there's no growth possible.
US economy we track real time wage and salary numbers based on income taxes as you know Liz.
And that down -- says we're growing at roughly the same rate of inflation 3%.
That's job growth bring in at a rate of growth the slowly ground sorry I know I've been monopolizing -- -- -- -- Europe aside.
-- I would argue that were in the -- here if you like of the price range and investors are very Leary at night right now to jump in.
And trying chase it higher what would you say to them.
Well I would say that fundamentals have outpaced up prices in fact go we think the market is supported by fundamentals the economy is expanding its not contracting profits are rising they're not falling balance sheets are exceptionally hopefully with tons of cash.
And valuations are cheap.
-- there's no question about that and that's the only information that's provided to you within a vacuum are you a buyer or seller you're you're absolutely.
A buyer.
And so importantly though fundamentals.
The market is is achieved today is it was a year ago because earnings have outpaced.
Of our true earnings of outpaced.
That's true.
Future earnings are declining year over year we expect what we've had lower revenues now.
Cap the gains from the depressed 09010.
Arena are overweight.
Yes companies got real -- now they've restock the pipeline there is very little growth in the system right now.
And there's no growth and earnings and second half of the year unless you believe the very bullish analysts who I don't know where they come up with this data because the real time numbers.
-- don't show an increase -- second if you look at PE ratios since 83.
That was that wasn't the economies was growing rapidly we're now have a slow growth economy -- -- high growth -- your head and neck but.
Well I would just say look saw a big issue in terms of our soft patch.
This time around has to do in the fiscal clip.
If you believe what we do that after the elections the fiscal cliff will be averted that will be a huge -- to confidence to business to consumers.
How does right now we are in a confidence a -- based on this fiscal -- Plus we think at some point Europe is gonna work its way toward a solution is painstakingly slow but it might take a 26 or seven summit.
And China will engage release.
Longer do a lot of hard my good -- -- -- -- those things that they're they're the.
-- yesterday Charles dramatics of UBS saying the exact same thing that the fiscal -- will be solved after the election and -- won't -- talking about the fiscal cliff about talking about Europe.
We ought that you guys don't think that's going to be solved you don't you think that a Smart guy like Mark Hawkins -- of these so called how.
What could he do printing money what how but maybe they should print trillions of euros and give one I'm not really -- billion way.
That's -- for how I saw many thing.
Printing money saw.
I mean -- -- Growing out of market with -- but Charles Stubbs you know we're gonna do put up bomb on the FaceBook page though because Charles is shorting.
Different things and so we want to show what your short quickly just mentioned the three things quickly Charles.
Okay the the FC I think is the Europe short the EU -- is the emerging market -- -- the CF.
Is the big banks short.
-- and they -- -- -- put his three -- there against that we'll see what happens I don't know I had that quickly.
J&J.
De -- Each and classic defensive steady idea to more offensive economically cyclical companies that are all three have better than bond dividend yields.
Good to see you tankan Giles I think -- -- number 34 but let's bring -- Charles back.
Cut but -- a lot of people can go ahead Charles separate free of -- street but -- you next time.
