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FBN's Liz MacDonald and Penn Financial Group President Matt McCall explain why “uncertainty” with the upcoming election and poor economy have inve...
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Corporate earnings have been just plain lousy there's no other way to say it almost two thirds of the company that are companies that are reported.
In the S&P 500 say they've earned less in the third quarter than -- Wall Street was expecting.
But that's not all heavy majority of them not only said last quarter was bad but the quarter -- in right now the fourth quarter.
Will now also be negative and what they're blaming is uncertainty.
Joining me now Fox Business network's Liz MacDonald and -- financial president Matt McCall and a map I mean this uncertainty.
Paul Krugman wrote a piece that said now that's a bunch of -- what do you make of.
I think again certify the biggest thing weighing on Wall Street right now even with the uncertainty the markets isn't doing that that -- when you put that out there first.
But if you ask anybody from a CEO of a company when -- report earnings as we've seen over the last two weeks the big CEOs are saying.
It's uncertainty as far as health -- is concerned and certainly as far as the fiscal cliff who our next president's going to be.
Taxes and then if US even the little people out there the little individual investor asked them why they're sitting on the sidelines right now and so much cash they -- is seeing things their uncertainty out there right now which is looming.
That scares people more than building things going to be bad timing and certainty is the worst you can half -- the market.
Well the list so for -- and start measuring uncertainty.
Net listed some there is the cost of obamacare next year.
Number one or is it fiscal cliff than those solution or lack of a solution number one what what audio ranked each.
I think it's both -- to you know look at the surveys and that is right I mean you know there's -- -- -- fortune 500.
CEOs of thousand of them and you know the majority over 80%.
I said yeah it's it's uncertainty over fiscal policy out of Washington DC because when you think about over the last two years the administration's gonna fight.
To remake you know huge swathe of the US economy.
Health care energy financial services anywhere from half to two thirds of the US economy.
And and many of -- people in congress -- read the bills so why would CEOs want to invest in environment like that you know Paul Krug -- the time -- -- to put out a column.
That I was talking to analysts about and -- sit essentially wrote a column called the uncertainty scanned.
And his argument in it was essentially that look you know there's and it's certainly -- that there -- some uncertainty where in the worst collapse since the Great Depression.
But you know -- -- nowhere -- -- PC you see any mention of these.
Surveys of CEOs themselves you know things like that CEOs that DuPont to UPS united technology all signing certainty.
Uncertainty rather in there and recent earnings reports and revenue by the way in the third quarter is -- zero to no growth we don't have revenue growth.
They're not gonna have earnings growth so it's not just a fiscal -- for talking about it's -- earnings clip that the markets are dealing with right now time well.
And -- Matt I mean this goes listen I I used to have a long list of things that were.
Reasons why investors.
Should not invest.
For every year going back to the beginning of the New York -- date there's always something out there that people -- all -- better wait.
Waiting is usually not a good good strategy.
No it never really works if you look at the long term trend -- market if you set out the last hundred years you mr.
Hutton.
Be the biggest wealth crater that's ever been alive you know so to me yes I -- 100%.
The problem is investors right now had been hurt over last twelve years whether to tech crash what is the most recent recession so David skates.
So in their mind they're looking at the way the government's run right now the way the market has heard them the way the big banks have hurt them.
And you know what they say understand the market.
But the only person -- fighting is themselves.
And the only time they can get back into the market is Linda headlines -- -- stock market a new all time high things are bad Dick.
That it's too late.
A fortune that's what your phone rings and you know that's a sign that the market is -- there's talk.
But -- or you did some reporting this is probably.
We -- to -- now but I thought it was it would fit with this conversation you were talking about Darden Restaurants -- all of garden and all all like group.
And the fact that there and not just the only ones there's a bunch of them now that are saying I'm gonna take my full time employees.
And cut them back to part time to get them under the requirement of Obama care.
Yeah that's right and you know -- Basically saw this coming time because.
There -- restaurants services industry big.
We basically employ a lot of people of that are don't each dot basically -- have a dedicated workforce is a lot of churn and on -- turnover in that workforce so.
Naturally any regulation -- the restaurant industry very very hard so what we're talking about here is -- the restaurants had what are called mini med plans.
Which they say they're very cheap plans that are now outlawed by Obama care.
And so Darden says okay well you know what we're just not gonna have you know people full time anymore but it basically avoid -- mandate tax an Obama care.
And drop that workers were test driving dropping our workers.
Below the thirty hour -- so they will not be deemed full time employees.
So that we don't have to pay the obamacare tax they're doing that -- for different markets which they won't reveal just yet time.
As it doesn't think about that list is that if if president -- reelected then we know that.
Obamacare is probably gonna be implemented.
If he's not re elected Mitt Romney said I'm gonna get rid of -- but he he.
You can't just go away and especially if the Republicans don't have to have a veto proof control of the senate they're not going to be able win in just collapse it -- -- it's still going to have to be dismantled over a period of time.
Yeah that's right and I don't know how congress could deal with that in the environment that Mitt Romney would win election.
On because these.
-- have basically these elements are rolling out right now.
And the markets -- that businesses across the country having to deal with these issues right now.
So you know I'll tell you something these are unintended consequences.
That we did not expect and restaurants and other companies small businesses -- not expect.
With Obama -- so let you know when you when you look at this CEOs for example today Tom.
Coming out with a letter saying look in new Washington DC you've got to fix your fiscal house we're doing in an hour and eighty CEOs -- saying that.
You know -- say something Washington DC congressman routinely say our constituents and not clamoring for deficit reform so -- -- there's an outbreak of -- leadership an outbreak of leadership in Washington DC here's a sudden crisis.
-- not gonna see at what you're saying not gonna see basically reform coming very quickly out of Washington DC -- All right so Matt what do you what -- -- -- -- the investor what's the what's the answer -- Sell everything via cell have to use stay where you ardea by at this point what you're going.
I think it is that with a long term plan any trying to play what's gonna happen with the election and then a month and a half later what's gonna happen with the fiscal -- and then as -- this explain how confusing obamacare is how that's gonna affect the economy.
You're not gonna will -- be chasing your tail I think you have to be a long term investor of the as you mentioned -- You know there's always something to worry about anything -- to the old adage.
A bull market climbs a wall of worry and you're -- the entire -- entire time that your worrying the stock market's going higher until you want to be in the market now right.
Never call -- McDonald's thank you both sure much.
