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BMO Harris Private Bank Chief Investment Officer Jack Ablin believes investors are more comfortable taking on risk today.
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At and when it comes to making money people aren't saving it just 55% of Americans have more -- emergency savings than they do.
Credit card debt this according to research done by Bankrate dot com joining us now from Chicago is Jack -- one chief investment officer at.
It's BMO Harris private bank which oversees.
66 billion dollars if 55% -- like if is more than half that's not really that bad admitted to back.
I guess not.
You know.
I don't know I I would've I would've thought it would have been less than that actually given the state of affairs that it when I hear about.
-- in terms of money in the cash that people have set aside you are seeing it go into the stock market finally.
Should that be a note of caution because again individual investors are usually so relate to the parties had a stake.
Yeah I mean I would say sell you know there there a couple of things going on -- -- is I think we're still theoretically as stocks are fair value.
I think what -- a price to sales ratio one point four times for the price to earnings ratio of of about fourteen times.
You know given given the cots given the tax increases this year's is not going to be a Blockbuster on the on the economic recovery seen.
I think 1511525.
Is really fair value and likely -- our year end forecast.
You know that said though there are a lot of elements that could propel this market higher.
Most notably you mentioned cash coming in off the sidelines.
But also this huge disparity in values between stocks and bonds and eventually.
Now wants corporate treasurers and business executives become.
More optimistic and it seems like there are.
They're gonna start leveraging that differential they're gonna start borrowing money cheaply.
And using that money perhaps to buy -- shares like you know Dowell and Heinz and Comcast deals and some other things that.
You know Wilson we could see stocks ratchet higher.
We're looking at the yield on the ten year still below 2% at what level does that yield have to get before it's a drag on the stock market before it's a drag on our economy because again.
Yet to be careful what you wish for PC -- really starting to come out of treasuries in out of bonds and the stocks.
It could be detrimental but at what level -- Great point in fact idol I would say right now we're we're in a reasonably safe zone.
Because again not that many investors arbitrage doors are actually exploiting.
That differential between stocks and bonds but I think that part of the reason why I think the we're we're getting such divergence in Fed's fed opinions in the last minute.
Is because they are worrying that they're gonna create.
Perhaps an equity bubble or and equity froth.
You it would that difference and then taking it moving interest rates higher could be really detrimental.
To to equity value.
Quickly Jack do you see more froth maybe not in stocks right now but what about commodities what is the most bubbly of asset classes.
Well you don't commodities haven't done much for awhile I would say gold is still probably a little -- -- we're not huge -- commodities right now.
-- commodities have been become less a victim of their own -- -- we're seeing now.
Unprecedented stockpiling.
Of inventory in a lot of industrial products but I think gold in particular seems to be.
A little bit overdone to the upside Jack great the -- thanks from me.
