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But the financial sector boy it's hard to love that -- the worst performing sector today however stretch it out what's the best for the year.
Plus it is one of the top holdings of my next guests fund he's here to tell us why but it's a specific way to look at the financials Jim Swanson -- And FS investment management chief investment strategist joining me for the last hour and a Fox Business exclusive.
It been around the Wall Street block many times how does.
In this part of the year feel to you is it particularly worries some more is that you should've expected October would be rough sensitive after a great August run -- really good September.
Right you should always October spooks -- no matter what so I am kinda nervous but we have on top of this in mixed earnings season coming in.
In the middle of it cyclical recovery that's not that strong.
So I think you have to be nervous -- -- put -- new money to work yet you kind of watch how this plays out if this.
Earnings sort of Malays continues to get worse I think -- stem market for while the cycles intact and we're gonna get pulled through into 2013 by house.
I'll -- you say stay out for awhile if rear view earnings numbers don't look great even today we get University of Michigan consumer sentiment report credits the preliminary part of October survey.
The best in five years that's right the to consumers being threatened by energy we just heard this story -- energy demand is falling in that we've got rising prices three before the pump nationwide this is a big risk to the consumer -- get a Annan.
Think -- a cabinet door and down supply -- -- up what something's going on short speculation and in the marketplace that -- them do -- -- I guess we can't try to fathom that but when we look at some of your biggest holdings you've got a lot of real estate real estate investment yeah pressed etc.
but you also do have financials.
Not necessarily the big names them.
That's right through regional money center banks rather -- the major money center banks -- -- Charlotte York banks didn't interest me as much as the local guys you know the regionals.
They're starting to lend again in the mortgage markets and make a nice spread out their deposits and this is important I got a call -- at home.
That someone called it the first time in five years did you -- home equity loan and I couldn't believe it was was -- former -- it was a smaller pack it was a small and.
Okay now here's this is happening I mean I couldn't get.
Citi to Britain re modify my mortgage but Lakeland bank -- insurance your stepped up to the plate and you know what they told he says you know what fine let the big boys.
The all scared and -- their money close to their best.
Will be out there Atlantic right.
This is how to make money in their spreads are starting to really wide now they're starting to make money again and the money center banks off the streets are still pretty -- -- yeah -- Stomach money they still make a spread on this but that big money center banks usually make their money and expanding asset base and C and I loans commercial -- and they're not seen that to me now.
-- just not look at a specific level of an S&P 500 right you look at a sort of peak to trough moves right.
Where are we.
Where we're nowhere near where we should be so this market has lagged the cyclical phenomenon we normally watch after -- recession typically at this point.
The markets are a 120% or about a 100% from that mark I think over the recession to expansion what do you mean not where we should be well on average -- you go through a whole cycle markets rise -- 188%.
From the -- that we had a deep below last time yeah.
Earnings have risen but the market has certainly kept pace of last three years and that's my point I am not hearing you say.
-- -- -- No I would not be all and -- a little nervous sickly bond markets have a little bit spooked here.
But I'm more.
Worried about how this earnings story plays out in the third quarter and it's really margins margins are near cyclical peak.
We don't wanna see them falter because that would signal weakening economy coming up Jim is going to tell you which sectors to get out up and which ones to go into.
Don't and the sentence on -- preposition listen.