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Charles Schwab Chief Investment Strategist Liz Ann Sonders on the impact of positive earnings on the markets.
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Coming up but now to the markets with big names in banking reporting their profit numbers this morning it.
JPMorgan.
And Goldman Sachs both making more money but -- earnings growth overall be enough to make -- some.
More money in the stock market we bring Liz -- Saunders in -- senior vice president and chief investment strategist at Charles Schwab.
-- Stamford Connecticut.
Remake of the earnings season which were in the middle -- -- the overall estimates that seeing -- two and a half percent growth for the S&P 500 or something like that are not great.
Seven upgrade we aren't looking at -- this sending pace of earnings growth which is not a big surprise I.
Actually think that estimates for 2013.
Probably are still a little bit -- I guess the good news.
From the market's perspective but I think the reason why there's been so much resilience in the face of this descending growth rate is that valuation on those earnings is about.
Two to three multiple points below the long term norms that we have a cushion to accept some of the others pulled out and -- That's okay see you can -- look at the -- you speak at thirteen for almost thirteen five.
And you kind of like the market it sounds like here but then as usual as it there's always this backdrop in Washington that's behind us -- says.
But what these guys messed it up again there's there's a -- after -- and the debt ceiling fight seems like it might be bigger than some of the other ones we've had recently although we've had that before -- Right you know it's it's not so much what if they mess -- -- it's it's -- how badly will inherit the capital they know what's coming and I think that's one of the factors that.
Probably tempers the 2011 as we went into that first call with some other it's not just things happening there are not happening now right Europe was much more of a mess.
And much more in riot mode we were just starting to get a sense of dysfunction in Washington where now unfortunately immune.
To wit and there was also great concerns about what might happen to treasury yields in the face of -- debt downgrade some that we had -- experience we know in hindsight that didn't happen.
That doesn't eliminate all possibility for volatility picking up here back and we learn some lessons.
Did you have a prediction then on what might happen this time around if they don't come up with a deal because -- right.
Maybe that was a big surprise that -- -- all interest rates are gonna skyrocket and instead money as a safe hasten.
Comes in here to the United States which seemed.
You know somewhat counter intuitive to some people but is -- -- guarantee that that happens again -- -- -- dip.
There's not a guarantee -- the other thing that happened was not just that foreign money was still willing to buy treasuries but that US investors were one of the concerns -- that.
If you loss of triple -- rating that many big foundations endowments pension is there were mandated to hold only triple -- securities would be forced to sell.
And what we found out was.
It is still yesterday event that the clean assure that Gary Pollack Judy is the Bill Gross at terminology annoy you had to do in many cases with just amend the -- -- policy statement.
Giving -- allow us to continue to hold what -- that double -- securities so.
I think I think the likelihood of of coming to fruition what we thought what happened in August 2011 is relatively limited although I do think a pickup in volatility certainly possible I yeah that's been our -- -- American claim to fame here recently the with the best of the worst against the -- since August has always thanks lot thanks the -- --
