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Jack Ablin, Harris Private Bank CIO, on why he believes the market is oversold and why we’re seeing a post-election reset.
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Up the index while -- down at least 10% from their recent highs so.
Could the market -- weaker the and it looks joining me now is Jack Kaplan chief investment officer with BMO Harris private bank Jack thank you let's begin right there.
So look nearly half of the S&P index and these -- not some of the smaller name some of the big name Microsoft apple Google.
Off 10% from highs so what shall take on that.
Yeah I think I think -- watching the technicals are at least what we will call the internals there's an important point.
Especially now given that we got close to what I would call full value fair value at 1450.
And it it seems like we just can't sustain that.
But you -- broader if you just look at fundamentals and valuation.
I would say that there is still some decent support for stocks.
-- would you say though that the market right now oversold for the first time since back in June as some economists are saying right now.
Yeah I think that down at least what we're what we saw yesterday and a little bit today is part of what I'll call kind of on a reset.
Given now that we have a landscape out there we've got.
You know that the cards are delta now investors are busy trying to figure out how to best -- their hand.
I think that's just creating in in some respects.
Kind of a one time shift.
And as investors are moving away from for example.
You know financials and energy because of regulatory environment.
-- right Telecom because of of dividends so yeah I think they're they're needs to be some adjustment I don't think this is necessarily the breakdown that that causes you know -- Bear market or anything like that.
You say that the tech sector is the best one to the position the best if you like under the Obama administration what you're raising meeting on blacked.
-- so if you look at the ten economic sector groups.
Technology.
Is probably best positioned under this -- -- environment because technology shares technology companies typically are.
Very heavily regulated so we don't expect any new increased regulation.
On tech shares and among the ten economic sector groups.
Technology companies have the lowest dividend yields so that any increase in the dividend tax.
Will impair them less than their their counterparts I think the only area where we could -- tech companies stunned.
Would be if president Obama's plan to tax foreign profits.
Comes back to haunt the group because keep in -- companies like Microsoft and apple pay on average maybe six or 7%.
In taxes.
Not 35.
-- corporate tax rate is largely due to the foreign profits -- -- -- If stop president Obama's gonna go after those foreign profits.
Talking about dividend tax about Muni bonds is not a good way to play that segment of the market.
We think so if tax if tax rates are going up and the tax rates appear to be going up to 36 for -- 39 point six.
Then municipal bonds those that offer.
Tax exemption will be incrementally.
-- -- we are a little worried about the the build America bond program expanding.
-- America bonds as a federal program.
That enables.
Municipalities to issue taxable.
Bonds and then be compensated for the difference from the federal government.
It's possible the feds could expand that program and then eliminate the tax exemption altogether but I don't see that happening out in the next couple years -- -- and he times or anytime soon tonight great information thank you so much Jack cabin with the Harris private bank.
