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John Thomas Financial Chief Market Analyst Wayne Kaufman on the factors potentially weighing on the market’s outlook.
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In focus tonight earnings season which picks up tomorrow with Alcoa reporting.
Both investors and analysts agree on one thing it's not looking good for company's bottom line so.
What should you the small investor.
Consumer the investor in your 401K to about it here with more Wayne Kaufman chief market analyst -- John Thomas financial.
When great to see you now at the expectations.
For earnings seasons -- to -- this quarter and next year.
Not entirely positive you -- -- when -- -- Well I know that I do agree with that there's there are bad expectations.
But.
That has been in the media for awhile.
So I think investors have already positioned.
For that.
Everybody knows I believe that pre announcements have been running the ratio of negative to positive pre announcements has been running four point three.
21 vs the long term average of 2.3 to want.
So.
I think a lot of this is already -- of the numbers it's it's baked into the numbers.
All right well you know we've got a lot of -- names coming out this week every from but he from JPMorgan tea Yum! Brands.
Let's talk a little bit about the future outlook and let's look at 2013 for just a second.
I think what's interesting is while analysts -- ratchet back their expectations for the upcoming quarter.
They haven't done at the 2013 necessarily UCS and 500 earnings estimates at 13%.
UCS and 500 super S&P small cap sector.
Up 25%.
Are those numbers gonna come back down.
And if that happens who's gonna disappoint.
I.
I think that that's one of the reasons that the large caps have been outperforming recently as opposed to small and mid caps is because.
People aren't respecting those numbers so far out but it it's very hard to talk about 2013.
Without talking about the election and -- that's trail and the the fiscal cliff that's coming up.
That's really important now longer term.
I'm very bullish but.
We have to see some things take place reason I'm bullish is because you've got to synchronized global.
Asset purchase program going on around the world you've got the Fed the east central bankers are print money had not -- central bankers are doing that what's said that.
Make sure that interest rates stay low so you've got.
The spread the so called fed model of valuation the spread between equity yields and bond yields is our it.
Very attractive so let's talk though for a second of that.
What might happen to the market if we don't get some pull back from this fiscal cliff in some -- what's your expectation.
If this earnings season is worse than expected because I I again I think it's a lot of its built -- -- it's really terrible.
And if I don't -- -- be overly political but I think that of President Obama is reelected.
That it's a problem and I could turn very bearish on the market for the balance of the Iraq.
You could see a sell off because I think people forecast problems out there conversely.
If Romney is elected I think that it's it's a whole new ball game -- I could be extremely bullish on the market going through.
'til march or April.
Is there any sector that can weather this storm of their -- the market you think.
Wow -- I'm really not worried about this area.
Definitely.
You just had guest on them talking about you know.
Restaurant so.
I like financials.
Health care no matter who's elected people worried if there's.
Obama's not re elected -- health care might not be so great but I disagree I think health -- is going to be good anyway.
And consumer discretionary stocks like a lot of retailers or like these restaurants -- talking about.
Some very positive trends that he's seeing so I I agree with that.
-- -- one of the issues that we've seen over and over again this year one of the things I'm really concerned about.
Is that small investors regular investors like me they've pulled out of the market they don't trust stocks that don't trust the stock market what would you tell them tonight.
-- tell them that the conditions are set.
For a tremendous bull market.
To go through.
Quite a few years once we solve some of these problems if we do get.
Romney in there you can have tremendous the United States is sitting on a tremendous amount of energy our own energy.
That's a huge thing historically.
A lot of people don't know and put the best years.
In a decade to investors typically the years -- end in two.
So.
That is -- fact I've never heard that's the truth so what you've got is you've had this huge middle class growing around the world so if we can get through.
Some of these problems we've got ahead of us now and I think it takes new leadership but if we get that new leadership I think we get through that I could paint the picture for a real super bull market.
American companies serve those middle class folks another country exactly waned thanks for coming -- and I really appreciate well.
