You're watching...
Caz Investments chairman Christopher Zook and Jefferies chief financial economist Ward McCarthy give their outlook for the markets.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
You -- much Lauren.
And the -- the so called fear index.
Staying near its lowest point in a year.
On the S&P edges closer and closer to its all time high.
We even made it glued to the fear finalists faded from the market -- investors letting their guard down too easily.
-- the result of CA easy investments here.
Ward McCarthy.
Jefferies chief financial economist join us -- -- big story Wall Street Journal today says the fear is gone.
I've been waiting for that should that be a good thing.
It should be a good thing but imagine that you're on the beach and it's partly cloudy in their sunshine coming through -- you see storm clouds on the horizon.
The -- question is how long can you enjoy the sunshine before those clouds come and you get struck by lightning that's where we are today we have to be looking towards more.
Congress controls as opposed to try to get to.
Much fun in the sun.
Right more McCarthy you know every time stocks get up to another nice little high that everyone gets afraid that they wanna kind of -- back -- -- -- rather than bulls or bears.
Economically when you look at the global and US economies do you see much reason for the fear to be gone.
Well that the markets -- gauged from the global economies a long time ago in my opinion.
For a couple of reasons and basically the both related to Q we.
Which of course is an ongoing phenomenon.
And one of the effects of Q -- it's basically been to squeeze out yield.
And the fixed income markets so as a consequence investors who want to get some yielded some returns on -- investments.
Have to turned equities and of course when you're at the highs that's the -- trade the decision to continue to be long.
And I think that are being long.
Even with the market up near towards the hardest continues to be the -- trade.
Yet -- let's remember that even if we managed to get from 141030.
With -- Dallas out of 14100160.
All time high back in October 07.
Our earnings are up significantly higher than they weren't 07 I mean stocks are barely kind of -- do what they were supposed to be a long time.
I don't well that's true and then valuations are not expensive right now the question is.
-- not cheap either so therefore how much contraction could you had if we have events that occur out of Europe.
-- if heaven forbid.
The Federal Reserve decided to turn off the -- -- so to speak.
-- if we start to see that occur that we think there's a significant pullback that can could that happen -- biggest thing we're concerned about is profit margins.
Profit margins they don't have much room to expand and that is where there could be potentially it.
Some pain to cut much -- -- -- because there already so good now Chris how imminent a pullback do you think we're going -- not hit the all time high 14100160.
Something.
It's very hard to say I would say that there's a good chance because momentum likes to follow momentum.
So as you go hire the prudent thing to do is to start reducing positions not being greedy.
But to sit there and reduce your risk profile to -- -- the pull back does com.
Then you have some powder that is dry and the pain traders -- other guests talked about OK it's OK to have some cash ward McCarthy you're you're the economist you talk about a path to prosperity with four keys to getting through Washington math tells about a well the first is the Fed.
The -- continues to be very accommodative.
And I think that will last through the year would be a different situation I think a year from now.
We also have a housing recovery that's sustainable and it's been very gradual which means I think it should have.
-- long duration.
The -- story in the US is not over I think it's really just beginning to blossom.
And that's going to help both the energy sector and an -- of variety of other sectors including manufacturing.
Because we the low cost producers of LNG in the universe.
And that is going to be part of a story as to why US manufacturing.
Is on the rebound both cyclically.
And on a secular basis all right thank you very much Chris second warmup parking that's what have you have convinced me to sell I got to say thanks --
