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Nicholas Colas, Convergex Group chief market strategist, on how the fiscal cliff and tax increases for the wealthy under President Obama will impact m...
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On the president's comments -- market reaction I'm joined now by Nicholas -- he's chief market strategist with -- convergence group and Nicholas thank you for being here.
I mean can you blame all of this market volatility the big sell off that we -- earlier this week.
On the president's re election.
It's hard to do that because I think it was probably well forecast was betting trades that like in trade predicting a victory and the we averaged -- These polls I stated that and it did seem to be priced -- but I think what happened is the oxygen that was really focus on this campaign -- has now gotten spread around for a variety of other topics.
And this fiscal -- -- first of only equals.
When it comes to things that the markets are now focused on again.
Thank you say US companies have done an excellent job generating in come in what has been a sputtering economy.
At best.
Now that we're focusing on those other areas you said in a fiscal cliff that we have lots of others these but obviously the tax implications of the coming up.
The impact of health care and so on.
Our business is still going to be holding onto their cash in their future moves because of the uncertainty naturally the 64 dollar question going into your -- in the first part of next year.
Because as you point out.
-- -- corporations -- a fantastic job generating very high levels of profitability and a very lackluster global economy.
But they also have to feel confident enough to add jobs.
And that's -- a critical factor that's missing.
As we go to -- worrying about all the different -- laid out so -- come down to the effect of all these over hangs on corporate confidence and adding jobs.
You spoke about a new notes I read five market tells -- will run through quickly Apple's best.
Apple's a very important stock because not only is it a very large market cap stock.
But don't in over a 126 ETFs -- up.
Over 20000 hedge funds own it's usually a market -- -- watching how apple -- -- -- formula does that the drop of -- stock over the last -- several days.
You know very hard -- -- -- -- actually cover apple yeah but I think it's a very important towel in terms of thinking about if the market's gonna recover.
Apple is a leadership name financials.
Financials are critical critical area for the market financial have had a very good rally this year up over 18% market's only up around 10% have been a leadership group and exactly the kind of if you want to see -- leadership.
It indicates strengthening demand for loans better credit quality and better housing market -- financials have to keep working of the market's gonna work.
Ten year bonds ten year bonds are great indicator of worries about deflation and the next recession.
-- the average period of account an economic expansion in the US last around.
Fifteen months or about 36 months and we could get a recession next year protective these fiscal -- what.
The ten year bonds are great -- what is gold silver -- him.
Moratorium I'm a big fan of gold and silver precious metals generally and -- graded for inflation and policy hedge.
But you don't wanna see gold rally very quickly because it indicates a lack of confidence in currencies and in capital markets very good and large cap sector rotation -- -- explained fancy Wall Street lingo for.
Different sectors do well at different times of the economic cycle the financials being one example we talked about.
But present for cyclicals consumer discretionary and also had very strong years if you see investors begin to get a little scared about the economy.
As chart selling off those groups it's never tell the markets and for more volatility.
Is this volatility as a good place and that is this volatility.
Just temporary it was just something we're gonna have to live with for a long I think we're doing we're while I don't think anybody really were actually expects -- what you saw on TV today yeah these two sides can come -- agreement anytime soon.
It's gonna be -- third hour.
Refused to settle for this year and -- into it all again next your last question has your outlook for 2013 changed to -- over the past two weeks.
As far as US stocks not really because -- -- -- up against the -- -- US companies have -- this fantastic -- increasing profitability -- -- and so there's a lot of other areas -- one might think about investing in the US stocks are still one of the -- areas.
-- volatile now but still one of the best replace the finish -- -- thank you so much of.
