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Charles Schwab Senior V.P. Liz Ann Sonders on how fiscal cliff concerns are impacting investors’ strategies.
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25 days and counting for congress to make a deal otherwise more than 600 billion dollars you know the -- and tax increases and spending cuts kick in.
The fiscal cliff potentially sending the economy into recession but the fear of the -- is that putting a veil over your eyes.
And preventing you from seeing some good news that could make you make better traits for your portfolio.
You need to see the forest for the trees to help us do that with and Saunders at a Fox Business -- -- Charles Schwab vice president and chief investment strategist.
And what's the biggest mistake was -- that the investor is making right now as it pertains to sort of navigating that very rocky fiscal cliff landscape.
I think if they're trying to trade around perceived outcomes I think that's fairly treacherous so.
I don't we don't get a sense a lot of investors are doing that there's certainly isn't just heard that you just heard John court -- saying you know what they're they're buying in on the dips because -- trading around the -- -- -- and there's a there's a lot of tax related strategies happening right now many of which may make a lot of sense but.
You know I've been asked the question -- -- you know what what what would do what would you would you put money on a particular outcome I would not think that that's fairly dangerous strategy okay it depended on what happens you know -- -- one wants an area could be just as damaging as another week we can't -- -- at this point so what should people be doing with their money right.
Well again I think there are certain things in individual investors might be able to do -- -- talent there advisor consultant who might be specific tax strategies are hedging strategies.
But that's very individual and nature.
Broadly we're certainly not -- trade around it we think fairly cautious on the market from a sector perspective relatively neutral.
So basically don't make any big bets kind of keep things close to the -- I'll wait until the dust settles a little bit that I think there's prime more opportunities to get a bit more tactical or 2013 -- so pretty sure and clearly like technology don't you why is that.
We've we've seen already I think -- hit to the economy come from the business side in anticipation of the -- -- -- uncertainty surrounding it so the retrenchment in capex in the restrain hiring I think it's being felt this year.
And I think did that's -- coiled spring that some pent up demand into 2013.
That I think.
Would probably find a lot of those dollars going into technology there continues to be in -- in a growth starved world.
We need to invest in productivity and efficiency that's not going going exactly folks what was and is saying is that if your company is holding back on spending on newer computers there's a cycle that becomes wellspring of boom as soon as anything looks decent they invest in that.
Up -- for the past three years all we've heard his.
We can't have a real rally in -- housing comes back day.
Housing coming back and ready to sit still does the entire market still depend on matter of people kind of become inured to the of gosh housing has to be released I think it it doesn't depend as much as it used to however I think people assume that it doesn't matter anymore and that I think -- what's being underestimated.
Is a positive ripple effects I think most.
Even the -- concede that we're seeing the beginnings of recovery here on the strong believer that that is the case but I think it's going to start to feed.
Into confidence is going to feed into jobs conceded to network so I think even though it's only about two point 7% of GDP.
The tentacles of an improvement in housing go well beyond not least being into psychology we would put together this what I thought was a very cool chart because it shows a very strong inverse correlation between.
Housing starts.
And the unemployment level so what you saw was a huge difference -- you know housing starts were dropping unemployment went up.
Now start to see a real trend in the reverse and and you know various C get started on the far right there starting to -- cross again and you know.
And it it is that does that then lead us to believe that the unemployment rate might finally come down and -- -- -- also there's that housing market index that's put up by the national association of homebuilders it's become a bit of a proxy for just housing broadly.
What about a fifteen month lag that tends to track the unemployment rate as it goes up the housing market index goes up the -- -- goes down.
We're now right entering into these sweet spot -- we should start to see.
Some pretty decent gains in jobs solely related to the improvement in house and do you tailor your strategy advice at Charles Schwab to.
The jobs report -- one on Friday and -- -- -- we -- did not make tactical calls around the jobs report -- mineral comes to play in terms of how the macro picture.
Good good good does it helps us define what are shorter term tactical -- but we don't we don't make -- -- day or month to month.
Trading call on jobs number and and suggests that clients move money around what's it been -- -- Charles Schwab you know it it is such a giant in the industry when it comes to.
You know but private investors and trading and people's accounts I'm -- people are very anxious about this fiscal cliff should they be as worried.
Are we overplaying it here in the meeting while -- time will tell I will say that that main street does not seem to be as focused on the -- Wall Street users businesses are.
May be the the answer as to how big an impact is somewhere in between.
The perceived whistling past the graveyard that the consumers are doing and the obsession that we all have a Wall Street have probably as a reality assignment -- in -- But I think that what.
What tends to boost consumers'.
Psyche their incomes would be things like gains in housing falling gasoline prices -- I think -- -- any recovery starting post hurricane sandy.
Those tend to come into play and then we've got both stocks and houses as the two biggest components of net worth both generally moving in the right direction so.
That I think is is causing the confidence among consumers.
And again this week.
Wall Street the media.
Have been -- I'm tired of talking about a how to get costs are really SS fiscal I'm so tired of those words but typical retailer.
Was and great job thank you and what that what -- what -- the -- he said was the most important.
-- the two things that are the biggest network for people their stocks and of course their housing or their home that they own property.
Are at least moving in the decent Rex has not been the case certainly not with housing -- -- -- -- Liz Ann Saunders of Charles Schwab she gets it right selloff and thank you great to see if it.
-- at closing.
