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Charles Schwab Chief Investment Strategist Liz Ann Sonders on the factors driving the market rally.
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Joining me now -- and some others she's senior vice president chief investment strategist for Charles Schwab.
It is great to see your welcome.
And -- -- this market.
Monday after Monday this market declines and then against all conventional plot seems to be rising most of the time.
What is going confidence is slow there the economy continues to disappoint.
Leadership -- Is checkered and its prospect.
What's going on.
Well I think there's couple thing longer term we talked about this just before.
You know the the wall of worry has been very well built and that's something that's -- like -- I think that.
The pervasiveness of pessimism.
Has really established from a contrary perspective the foundation for the for the market to do well not to mention -- the corporate earnings have been quite strong.
Those earnings as you say strong -- -- come near we're nearing the close of another quarter.
What is going to being.
And determinant in the direction of this market because if you say there's substantial wall of worry but there's also it seems some stubborn facts that don't wanna go away with a successful -- -- there.
And I think the -- -- the fiscal clip is a big issue I think it's certainly big issue in terms of the economy I think it's one of the primary things -- businesses back I think.
There are these budding sort of green shoots as they called -- there's animal spirits but I think want to come out green shoots and animals -- bring those together you got there being suppressed -- by virtue of just general election uncertainty but then also ballooning fiscal cliffs I think that's the big near term issue I think some of the rally recently is also.
Based on -- at least slightly better news out of Europe and maybe that unbelievable.
Negative tail risk.
Having been diminished by virtue what they did recently so.
That's enough.
A recent report -- from the World Economic Forum.
Turning over the lead.
For our competitiveness world competitiveness.
To the northern European nations in taking and moving us down to seventh place.
-- Their financial crisis.
That -- are considered more competitive than we.
Well I would you know we have dropped and competitiveness that it is only several of the northern European countries is certainly not the bulk of the peripheral.
Countries and we have a real problem if we start to find ourselves below some of those nations.
Zero -- of my favorite countries Italy and Spain -- in real trouble -- Greece and it's it's a cataclysm.
Meanwhile.
That the Swiss who did the -- economic forum report.
For some reason decided.
They would be the leaders -- model for.
-- -- they have certainly become a safe havens -- to the extent that's on the the checklists.
They've basically but that now.
This week we're going to get it seems some sense of what the federal -- whether it is something or nothing.
What do you think it will.
Well I think I think there probably still on the fence certainly the jobs report I think maybe move that we need a little bit more toward a third round.
Of quantitative easing but there are other factors that I think push against that I think Bernanke realizes that this the inflation risk the commodity.
Price inflation risks that we've got diminishing returns.
From the very strands of quantitative easing just this increase cents that would -- central banks everywhere.
Almost is providing the sort of artificial pressure down and not letting market forces.
Come into place that they may just use their words and extend.
The tightening time frame out to twenty team.
Me ask you this but what what is your the your outlook should there be no quantitative easing that there should be any more.
Stimulus.
And monetary policy.
What happened.
So while my personal outlook as I would cheer no additional stimulus from the Fed but that's my personal island and we now last I checked my -- and I did not have one from chairman Bernanke asked me what I thought so.
My view is that we have been we do that this is a service we provide OK thank you would.
Well I'm you know I do not think rates being -- -- -- what ails us but you could argue that what they've done so are certainly was appropriate with QE1.
During the -- financial crisis I think that was necessary QE2 is a little bit more.
Questionable although it probably did keep deflation.
At day and help the housing market -- -- -- needed now.
You don't think it's needed -- the same time.
I've got to ask you do you see -- way through this sixteen trillion dollar national debt that we have these -- consecutive trillion dollar deficits.
If this country doesn't re inflate.
I -- know it's unpopular -- I fight I think you're going to have eight a combination every inflation.
But also you have to have everything else you can't.
Do this purely on the spending side you certainly can't do purely on the tax side you have to have entitlement reform you have to have a structure in place to grow the economy.
And you have to have appropriate monetary policy tend to work alongside that aren't from this tool truce period for retail investors to turn.
It is scary and so many ways and you and fortunately we keep adding to the list of things that suggest to the individual investor that the plane you know that's just not level.
And it's going to take some time it's probably going to be a much higher prices.
-- -- -- -- -- Is there a Wall Street leaders capable it's a of taking the advanced point on this and saying you know we're going to have to run business.
In the marketplace quite differently than we are.
I don't know -- you know -- I'd like to think voices like you know my ultimate boss chuck -- -- -- -- -- voices out there for the am individual investor.
But I think the healing process is going to take a long time there's but there's incredible muscle memory of the pain of 2008 and I think it's going to be.
A factor of time and time again unfortunately higher prices -- -- given up muscle.
It was a -- -- thanks to -- being -- pre.
