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Robert Keiser, S&P Capital IQ VP, on how the fiscal cliff is impacting markets and corporate earnings.
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She's Democrat.
All right.
Some -- going out these markets now -- the euphoria over holiday shopping season kind of fading fast on Wall Street partially because of well women talk -- out of the fiscal cliff.
And it's not just about taxes our next guest says corporate earnings are at risk joining us now Bob -- senior vice president.
SP capital IQ global markets intelligent.
Bob we've -- this is been going on why is it affecting corporate earnings -- everyone has known they were going to be dangling down to the last wire.
The global markets always trade and expectations Tracy but the truth of the matter is supreme been increasingly since the start of the second -- this happen this year.
Getting a sense that this is a leap of faith rally.
Because.
What that the market -- realizes corporate earnings for the S&P 500.
Have been stuck at roughly 2550 a share since the second quarter of 2011 but basically trading sideways trading flat but the year ago comparisons have been favorable -- when you've had positive earnings growth.
Now you're coming to a period where.
We're gonna end we believe demand this year right around 2550 but next year disposed to get up to thirty dollars a share by the end of 2013.
At a time now you've got these really bullish expectations in the market which have been driving prices higher.
But you've got the looming fiscal -- out there what is it gonna do to the economy is -- gonna tip it over into recession if we even start to skirt recession.
You have to -- thirty dollars share for the in the next year.
Flat earnings growth it's not a good environment -- -- -- earnings growth though because you're.
That comes back into the consumer and the consumer being nervous and not -- -- buying product and that.
Is how the bottom line is affected in a surprisingly it is partially the consumer but this has been any sub par recovery GDP growth has been between 12%.
The consumer is done more than their fair share basic and -- you know they've been growing our activity by healthy pace.
But you have to wonder how long can the consumer keep it up.
But there are issues that.
Give you pause for next year most of which is the fiscal -- But you've also got things like is well how is -- the financial sector going to -- we see more bank lending next year or less given the uncertainty -- world facing.
And we have a lot coming down the pike of course Dodd-Frank we have uncertainty in taxes.
You're you know technical -- mentioned it earlier we seem to forget sometimes that Europe is still in complete disarray right.
Even -- ECB president Mario Draghi said I'll do whatever it takes we still can't seem to get a deal at their -- -- the Europe is definitely recession and drug he has done has cities he'll do everything in his power to underpin the Euro and he's come up with the open market transaction which is their own version of quantitative easing.
Bernanke -- on QE3 so.
The policy makers have done everything they can to underpin growth going to 2013.
For Bernanke himself has admitted that his tools are basically our analysts if we go over the cliff.
So let's talk about this everyone wants this -- stopped.
Obviously what it what is the one thing you'd like to see in order to help these markets in 2013.
That -- that the decision makers in Washington have to be very careful because you can have the consequences of inaction which has been my proposed by the numbers business leaders which is punting it which means we get more the same more uncertainty.
Decision makers don't Latin and hire more employees in plenary it does not fall or the concorde the alternatives they do too much and -- damage disposable income.
There's another secret of this it of this economy this recovery has been -- disposable income growth is gone nowhere since -- 2000 separate and that you can increase taxes on any portion of the economy.
It could damage disposable income -- -- consumption go down.
Risk recession goes up hopefully -- they find a nice little bounce back to challenge its yeah joke guys -- -- capital IQ VP thank you.
Thank --
