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LPL Financial chief market strategist Jeff Kleintop and Pitt Capital Group vice president Kim Forrest weigh in on the state of the markets.
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Today all -- almost half of the S&P 500 stocks and correction.
Yesterday's triple digit selloff may be a sign that the market is weaker than a look that investors.
Or just selling for political reasons Jeff -- -- -- up slightly from chief market strategist this year.
And Kim Forrest Pitt capital group vice president also joins me just -- you first you're saying it's time to get.
Defensive what is so nervous so why did investors predict that this was gonna happen that the president will go ahead.
-- Well it's it's interesting -- his way we look at I industries based five up political -- -- looking at those most favored by Republicans those favored by Democrats.
Section of the democratic industries have been doing most.
The better over the course of most of the year until the first debate and it's interesting.
Yesterday a little bit today -- the biggest movers in the market.
Are politically motivated yesterday and 8% decline.
And a Republican -- coal industry that certainly wasn't something that that was expected by those investors after running that sector of 25% in the prior month but look we've got.
Not just a fiscal cliff -- -- and all these other issues bowed to weak profits but -- global economy showing up and -- McDonald's profits here today.
We've got a number of other global issues going on right now that keep investors -- in a defensive mode probably at least through much later this year not into next year.
Just you know you're example about coal stocks you know jumping up after the first debated and down there were down yesterday that's a very good point can't you know -- what you think I mean do you think the markets were really making the truth something.
Assumption that governor Romney.
Was -- -- -- where they've fully betting on that.
I don't know if they were really betting on it but I do think that especially some of the sectors.
That we're just talked about coal being one of them.
You know that was acting irrationally because -- I look at what they're demand as I look at what their earnings are.
I didn't necessarily want to be in coal at those prices that they were the last couple -- days.
Right before the election so I agree with your other gaps that there was a little bit of betting on -- was winning her who was not winning.
-- it even more than that I think.
That markets are in for a correction.
You know we've been is seeing -- lower.
Revenues and lower earnings and this is all about earnings what this stock market always does.
Is it looks forward.
And we're not seeing strength in next year in any kind of way so you know I think that this pullback from the highs.
Is a -- and all reaction.
OK let it definitely -- here's the thing a -- to be basically agree.
That -- -- is time to get defensive -- -- strategies are a bit different -- and particularly when it comes to homebuilders these names have had a huge run up.
This year we're gonna get mortgage rates still exist angle up 4% for some time -- you still like the humbled.
It's one of the few things you can still count on listen we think is -- and cash in your portfolio of some cold as well -- -- to be a little bit offensive.
But look at the homebuilders it's -- it's a trend that you can count on its.
Actually favored by the the outcome here of the elections remember the the Democrats are likely to be a lot less harsh and Fannie and Freddie than the Republicans would have been.
And it likely to continue to support.
Housing and in a lot of different ways so that remains possible political backdrop the momentum in housing is strong and rates are gonna remain low for some time so that is one area at least if you're gonna stay in the market he can remain comfortable that the the the home -- might might give you well -- trends that are.
Disassociated from some of the other headwinds or face.
Okay can't I'm looking at some any ideas -- -- -- did you have you have dull way I was a little bit surprised by this from considering.
-- that the defense side of the business of Boeing is actually other taken a -- to that side of the business right now -- why going stale.
Well.
Boeing's probably biggest benefactor has -- the emerging market.
We think that the emerging market over time is gonna continue to grow.
You know airplane -- something that you're going to be -- store and pick one up itself you have to get in line.
You have today you know to sign a contract and you're getting probably.
A few you know if not a whole fleet from your ordering that from Boeing and it takes a very long -- -- -- time.
We think the emerging markets are gonna continue to 12.
Fly and that that area is going to do extremely well for Boeing.
I think -- well you know there they are get a public come up with a third version of the yet dreamliner those are international.
Airlines are looking to buy and there are several -- TI do wanna ask each about the fiscal -- Jeff do you first best hope clip how worried are you.
I'm very worried but I think we get a deal done -- lame duck sessions have not been good for the stock market.
And -- all the lame duck sessions we've seen the last fifty years stocks have fallen that during an evil we have legislative.
Accomplishments.
But I think we're gonna get a deal done I think -- see the middle class tax cuts extended and -- deferral of the sequester on defense.
I think we'll get that done hopefully by the end of the year that's a positive you wanna you wanna -- on that but I wanna be offensive.
Now the -- Boeing picked if nothing else general -- you worried about fiscal club.
Yeah I am and I'm not -- at that time either party I think that there's a whole lot of game playing here.
And I don't know that anybody really understands what's gonna happen if we do you follow up the fiscal -- I think it just does not bode well for that tax Payer and somebody has to put their big point.
Boy pants on.
Sit down at a table and you really hash things out -- at this point I don't really see that happening as a taxpayer and as a citizen I devoutly wish.
They you know somebody would stake their career and make that happen in big move.
Time to put on your big boy pants camp over the gambling -- as he lines up thanks a -- that they appreciate.
