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FBN's Liz MacDonald, Charles Payne and Bob Baur of Principal Global Investors weigh in on the market rally.
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Let's roll thank you call -- value -- pretty good panel to start us off here -- today the big question.
After the record close for the Dow is how Long Will this rally last.
Tests and we -- joined by fox business' Charles Payne and Elizabeth MacDonald Charles is on every day you Elizabeth are not.
Liz what you say yes and I talked to Jeff Klein top -- that LPL financial they run 373 billion dollars in money.
He's saying in this market isn't retracing the exact same pattern it -- -- 112012.
Meaning it will bounce around -- 141000.
Dollar and 141000 rather mark.
And he's saying you know watch that members of the doubt -- -- five stocks really power the -- forward.
But the fact that AIG Citigroup GM -- no longer any doubt really matters to him also we talk -- Barings asset management.
There essentially saying that look private margins will not hit the peak levels they saw -- -- 112012.
And that means that they do see a moderate kind of pull back this year.
With revenue top line erosion and that the big the big question of course.
Is that the economy improves that means the federal dials back on its bond buying we know that that's not our -- pull back every time.
All right we're also -- is a pretty good panel we also Bob baur chief global economist at principal global investors joining us today from to -- -- -- get to -- -- about the Charles you've been pretty enthusiastic about all this is rally of the stocks.
Yeah eleven enthusiastic about -- them in the market for a long time actually does not the market -- -- enthusiastic about individual companies that that I think are great companies you know.
People that we want to walk in his and -- building all day long for the last three years -- they have Michael course handbags and Michael quartz watches and Michael -- stresses but not Michael -- stock.
You know has so it's far and -- make the point due to talk about -- of the Dow thirty stocks thirty companies.
-- they haven't come in gigantic global footprints and I you know my main investment thesis is.
That the global economy is doing extraordinarily well we're so myopic and Europe and America will we don't.
Understand it's no longer about Paris Athens and Madrid it's about Wanda it's about -- who is about Panama City and that's -- -- enthusiastic.
And it's about uncle say I'm Bob is the choice increasingly for retail investors.
Do I want to loan my money to Uncle Sam for say ten years and get paid almost nothing less than 2% a year or do while want to own a piece.
Of an American business that is growing is that the choice and -- investors make the right one.
Well I think that certainly a choice -- that what we're not very optimistic on owning US treasuries for ten years we think the outlook for returns.
There is certainly not great there -- far preferred our own that pieces of US businesses or maybe even some global businesses.
We think the stock market is going up for -- for some good reasons -- there it's -- -- -- some -- -- the -- Charles is making what's the level then.
Of skepticism you started to get into this was a moment ago that's that's really out there this time -- You know I'm -- that's gonna sound like an oxymoron but it's optimistic scepticism in other words they do see profit margins slightly sticking to review I have been at peak levels in 2011 twinkle with these guys that I talked -- also JPMorgan Chase but to charles' point the big picture narrative for the market is this three billion.
Middle class consumers new middle class consumers to get beating mean consumers joining that -- -- those ranks around the world so that is always a positive -- for global.
Indices hey Bob do we need the and the individual investor to continue to put money into the US stock market.
This rally to continue look at -- we just got the latest weekly inflows or outflows from the Investment Company Institute a mutual funds.
In US mutual funds -- money came out more than a billion dollars when you have five billion again.
Going into bond funds -- -- -- the trend.
Well I think that's true and it's been a trend ever since the financial crisis money has been flowing out of stocks and into bonds.
And that that great rotation that a lot of people are talking about has not just happened yet.
But we think it may at some point down the road but there a couple of good reasons we think why the stock market is where it is whether it's that our that S&P.
One is there's a lot less fear in the second is that the fundamentals are doing better let me explain.
In all we thought for 2013.
One of -- -- staff.
2012.
You know we did not have -- we did not walk the fiscal cliff but China did not have a hard landing the Euro did not collapse.
The -- and prophecy didn't come true.
So despite all the doom and gloom from last year those risks did not happen and as those risks may do we think people are going into out what's more aggressive positioning of their portfolios -- did start to our markets that's -- 141000 to 78 on the Dow is -- are more reporting throughout the day from Elizabeth MacDonald as we move right to left Charles Payne is always and Bob -- thanks lot for coming on.
