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Former Goldman Sachs vice chairman Robert Steven Kaplan on companies announcing special dividends and the state of the markets.
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So is this just kind of a different type of stimulus and in whole foods now the latest announcing special dividend to bucks a share.
We've had a number of these companies the last couple of weeks.
With dividends announced right before the potential of a tax increase.
At the end of the year so with reaction to that Robert Stephen Kaplan joins us former vice chairman at Goldman so.
And he's the author of what to ask the person in the mirror.
The question would ask you today is what happen.
Happens when all this goes away what about next year when we don't have these these dividends being headed out what should you know help stocks.
-- I'm not sure how much these dividends actually are affecting stocks and my guess is it's it's immaterial and and the reason is.
Even though there's 125 companies have announced -- special dividends are accelerating their dividends.
When you add up all the money involved.
It's not a huge number it's 45 billion dollars and you got to remember most stocks run by institutions.
Anyhow I'm not -- individual so.
Actually don't see much stimulus here.
And I I actually the market takes into account when -- value stocks so.
To answer your question I think people are much more focused on what's -- happening GNP growth next year which people things can be modest.
-- what's gonna happen earnings and obviously what's coming out of Washington -- of I think things are bigger drivers.
That we talked about -- over over here trying to handicap this whole fiscal cliff.
Situation which I mean you could take a stab -- -- as well but when you make assumptions for next year it can you make any right now I'm in how'd.
How do you what percentage is do you put on the fact that -- we'll have some sort of a deal vs.
Boy I really better be careful the way I invest because I don't know what -- -- these guys are gonna come up with.
-- -- what here's what I think people in the markets are doing right now there's there's.
Apart they know and the part they don't know that I think most analysts looking at the market generally are assuming GNP growth is going to be sluggish.
And they think whatever deal comes out of Washington whatever it is is gonna have.
Probably make it more sluggish.
And so what what they're then deciding is a really realistic that the of that Standard and Poor's 500 companies.
Can -- a 115 dollars next year.
And I think they're wondering about that so I think you're gonna see you're seeing the PE.
In the market come down another part that's the uncertainty is what kinda deal we gonna have and are you gonna have just two recurring saga.
Psychological drama coming out of Washington.
Where they they kick the can -- they don't make a deal and I think the market fears that.
Because it it undermines confidence particularly in the consumer and have companies.
And that's the bit -- Think one of the things he gets lost in Stuart Hoffman was on -- -- earlier from.
From PNC and he brought the seven and one of the things he gets loss in all this is even if they do.
-- quote unquote deal the idea of that kind of solves everything -- puts us on the right track is kind of a misnomer in and of itself because just.
Based on the fact that a deal will be reached you're going to have it's it's not going to be.
Be something that -- that in and of itself from its growth because what -- you gonna get you to raise taxes are you gonna cut spending neither one of those stimulates growth right so you're it's just a matter of how much you do -- What's the path then back to the growth.
Well this is why.
Although Obama's proposal -- talk about spending cuts and I wish he had.
He did you know -- he talked about stimulus and infrastructure spending and part of his proposal.
That's the reason they're they're gonna spend some on on infrastructure they're worried about the economy.
You bet they don't think an idea why are there any neck in the first half of next year very indymac.
You think that's a good idea because -- heard today from people's mind we can't be spending -- -- here we're ensued we don't have the money and all my kind of thing what do you what do you make of it.
I think we've got to we don't have a choice we've got to raise revenue and raise some revenues we've got to cut spending we've got to get on on a more.
On them a more solid path companies want that everybody wants it but there's going to be a cost to what.
And the other problem is you know you to your point when you talk about -- word to use the word tax reform -- -- -- to be tax reform.
What that what does that mean they're gonna deal with either the mortgage deduction the charitable deduction of the state tax deduction right think about that how that affects the behavior of individuals.
If I don't know whether -- have a mortgage deduction or in particular how much charitable giving dyke and I doing get a tax deduction.
And that's all coming down the road that's gonna come and get talked about next year really affects people's behavior.
-- Robert always good stuff from Harvard today Robert Stephen Kaplan formally vice chair at Goldman Sachs -- slots are.
