You're watching...
First Trust Advisors chief economist Brian Wesbury argues stocks are undervalued and gives his outlook for the economy.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
That's always fun -- object got some other numbers for you the value of US stocks up by twelve trillion dollars since 2000.
And not those numbers are from the Federal Reserve our next guest says there's still room for growth in the stock market is trooper Brian Wesbury and chief economist for -- -- We know annoyed by the way before we get to stock market is -- it a Marshall writer.
-- -- Marshall as big a keynesian the keynesian above keynesian that sounds like -- -- and if if he was right -- -- this government spending actually help the economy then Europe.
Should be booming and it should have been booming for the last forty years and clearly it hasn't been so I so I don't believe there's any evidence to Peru and he's right that government spending helps the risks and -- we're gonna not to take all -- time when the -- -- last court martial on that they'd be in the if you actually look at the prosperity of -- -- in the post war period it's it's been.
Absolutely outstanding relative to the US in the -- the -- it isn't it in -- in the last -- in the last five years you've had substantial cuts in government expense in the you've got depression style numbers it's nothing it there but Marshall Marshall there's no government in Europe that is actually cut.
Spending in the last five years.
Zero nada -- over the last forty years over the last forty years France has had an eight point 1%.
Unemployment rate on average over forty years that that wouldn't fly here in the United States we have 8% on -- -- we think that's a depression.
About France they think it's normal and that's what happens when you have too big of a government.
I think looked -- agree to disagree all I would point -- is.
I'm not partisan I mean I I think of Ronald Reagan did an outstanding job getting unemployment down by a substantial tax cuts so you know I think we would probably agree that was a good way to go and I don't think he.
We did it might shrinking the government and through this up fiscal austerity -- -- -- All right we're -- -- -- I don't know -- I'll -- and do with Ronald Reagan was a great president.
I don't know yet publicly could have gone and I -- I think I think.
Barak continuing from where we left off or where restarted Brian less fair guys concept that was pretty -- -- not discuss what -- a -- you're listening in.
Why not you have discuss -- for a few minutes and but the concept of the stock market it has run up a lot and everybody keeps coming to us with this question.
Now isn't.
The time I should be pulling back now is the time why should keep following the rally but you're you're a relative optimist and on the US economy.
Right I -- you like stocks above anything else right.
Sure I well I do I think stocks are really undervalued Connell I mean first of all 69%.
Of S&P 500 companies.
Have reported.
So or have have beat expectations so far in this earning cycle.
-- it looks like we're gonna have about 25 dollars and 95 cents close to 26 dollars a share in earnings for the quarter.
That puts that PE ratio of the S&P right now and a little less than fourteen if you and annualized that.
I think that's it that's a really cheap market especially.
When you compare it to 2% bond yields so yeah I I I think this is the place to be and I think the market's gonna continue to go up.
But you get people coming out of thus some of the bond funds that they did and -- -- now one I'm not gonna go back -- -- Bonds let me put it to work in the stock market heard that argument it's logical what -- -- -- -- economic argument that kind of is underneath that you look at the treasury -- today and ten year by the way just below 2%.
Because of Marshall was talking that we don't and you guys discuss have a quote unquote spending problem -- mean obviously we heard both sides of of that but.
All of that said you like the economy right why.
Right well I I think -- I've -- and I you know that I call it the plow horse economy it.
We're we're clearly not a thoroughbred -- not gonna win the Kentucky Derby here in the United States but but -- -- plow -- we just keep on growing.
It -- last week we had some very interesting data on construction.
And the trade deficit.
And it looks like that negative report on fourth quarter GDP is gonna turn out to be a false signal it I think we're gonna end up with about a half percent growth now.
Don't get me wrong that's -- that's a weak economy.
But but we're not doing as bad as the as the bears think I think we're gonna grow.
Two and a half percent.
Up productivity is booming new technologies like 3-D printing in the cloud in the Smartphone in the tablet.
These are allowing profit margins to go up and that's why -- we consistently see sixty to 70% of companies beating estimates.
I think S&P earnings can easily be a 110.
And if you put if you put a multiple on there -- fifteen or sixteen we have -- a long way to go in this market fair enough and Brian thanks for flight along with.
Marshall and arts person there who's gonna -- done.
Great -- is always on these these issues are.
