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Newoak Capital president James Frischling and Kanaly Trust chairman Drew Kanaly give their outlook for the markets.
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Much we'll overall stocks reaching levels not seen since before the Great Recession the Dow and the S&P continue to hit multi year highs but could -- be in.
For -- correction -- new capital president Andrew can -- can really trust chairman both join me now in.
And you're using a correction is overdue -- Jim I know you're more bullets.
Bullish but -- to start with you why -- worried about a pullback considering these numbers were heading over over every session.
Well I mean -- typically when when your sort of in -- -- secular bear market you'll see a correction after this period of time vicious kind of that reversion to the mean kind of -- look at it but F.
If were were emerging from this you know secular bear market moving into secular bowl -- you you should be concerned and so really.
For for long term investors you've -- looking through this if you've got a lot of cash and you're looking to commit the market.
You might just take a pause here and and look at that for a minute or two is actually went.
You have but your equity to fund held hostage but I think we need to focus on the short term because there's a lot of unanswered questions for our viewers and of course there investments and and -- -- that you are looking short term.
But you're saying that this rally absolutely is gonna continue for for several strongly.
It's not I think that's right I mean we we certainly believe that much of this rally in much of the reason for the multi year highs and -- Has been on back of the Fed.
And central banks globally -- commitment to low rates and prominent stimulus.
And -- -- Turkey the dollar relative to other currencies it certainly is resulted in the -- with a doubling of the SMP in the doubt.
We also have equity holdings still at a near historic low and so so what was the Great Recession is -- to become the great rotation and we're gonna see insurance companies pension fund.
-- looking at Lipper numbers that suggest funds are now falling back in equities -- over the last five years formal money was pulled out of the equity markets and into bonds when Aussie market money flowing back into equities we've got corporate buybacks which are are hitting all time highs Richard good for earnings.
And we also have -- -- PE ratios still suggesting that not at their historical.
Levels in which case -- we think the market is not an overvalued on that basis.
You know but at the same time drew -- you say that.
The one of the things and and this divergent points up at the the cadet at the Fed is -- the markets higher you say hey that's gonna run out that that could run out this year at some point depending on what the Fed decides doing that could be another short term.
Negative in your opinion.
Well I would rather than the Fed unwind is -- is another matter but let me repeats in the what Jim just said is correct.
OK I mean stocks are under -- there is a rotation that's in a minute.
And and what I was talking about with the Fed is is in terms of allocating to fixed income.
You're looking at a thirty year trend that's coming to an end and so the that the probability of repeating success -- fixed income.
Going forward given that the Fed is going to have to unwind at some point.
Is very low so it it it is at the point in your allocation you need to be thinking about.
More long equity need to be thinking globally and and emerging markets so it's what I was talking about that the top of the segment is.
Technically speaking.
You should be due for a correction here but if if fundamentals continue to be strong you may both through that -- in -- -- -- but -- -- overbought position.
Drew another thing is the debt ceiling debate and that is another short term -- -- That the markets -- you know.
-- -- You -- more than likely you're going to be living with a debt ceiling debate.
This quarter.
Next quarter the quarter following that in the until we come up with some sort of plan to exit this nonsense.
You're gonna see this debt ceiling debate go on for some time so.
Probably president -- You should you should be looking through it if you look at the market action.
They're looking through -- -- or do you agree or disagree with that yeah I guess I just -- that not that it's not gonna be a real debate but the market is no longer in the fall for the rhetoric of Washington.
And the digging appeals resulting any pullback -- what -- seen the passive anywhere from ten to 15%.
We didn't see in the fiscal -- debate the market was not -- fort and they're not gonna fall for at this time.
-- fresh slaying -- is okay Neely thanks to both of you appreciate a love to get the -- is -- thank you.
