Fox Business
Expand
Browse All Video
Watch Live

You're watching...

Is the Fed a Risk to the Rally?

Details

  • Description

    Gary Kaltbaum of Kaltbaum Capital Management argues the market rally is Fed driven.

  • Duration 6:01
  • Date

Clips

Also in this playlist...

Latest Video

Auto-advance: ON

Auto-advance
View All

Transcript

This transcript is automatically generated

Well you know given that record breaking day added the Dow had yesterday what is take a look back at -- we were back in 2007.

That's the last time that we saw a record high.

Up for the Dow and if you look at some of the examples are about to show you Dennis stocks somewhat cheaper as you know what yet you look at the trailing PE here.

Should be percentages but -- you're right it was -- trailing twelve of seventeen more expensive than now right.

Right absolutely this is on a trailing twelve month basis and as you can see.

-- -- -- the PE this -- for at the S&P obviously.

Was more expensive than it was today but it can deploy PE actually if you look at today Dennis.

It is more expensive now and at four.

2007.

Right one thing the Wall Street been wrong about earnings -- -- lower and so when there isn't in the coming up they turn -- take that multiple down.

The revenue growth in the previous twelve months of the bright growing much faster -- revenue growth seven point 6% vs 3.5 forgets that this shows where we are though as an economy in the GDP is 12% larger share -- almost sixteen trillion vs October 07.

GDP growth though in the -- previous twelve months is is that it is only three it's down three point one points to 2.2 percent.

And then we -- hundred US export up almost 40% Carol what's a good thing for the economy.

Think it's good to know to that and double looking at the GDP number hers while because again do you have a an economy not growing when you have a market growing inside and say that maybe the market is getting ahead of itself we're gonna talk to Gary K -- just a moment.

Also the debt issue in many of you at home have been listening -- of course all the rhetoric coming out of DC the debt problem is huge and the debt burden for this country right now.

Is much heavier can look at 2007 this is federal debt October 2007 a little over nine trillion dollars sixteen trillion.

Dollars percentage basis 83%.

Of the job and a new look at corporate -- on the S&P 500 side as well up 13%.

Since 2007.

A concern but Americans all of you at home have done great in reducing your household that take a look at -- down 6% so.

While the federal government Dennis keep spending Americans are scrambling back I think.

By all the data gathered up 27% and live and half years right lastly.

Look at the overall big picture guys and why this rally may not be over take a look at corporate catch -- 6% to one point seven trillion dollars.

Bank deposits.

Up 40%.

To nine trillion consumer spending that's a twelve month consumer spend rate.

It.

Up 14% and finally home values still down 15%.

But down only 15% -- -- particularly reason to think that this is not a top here that maybe this economy has some support that we don't see.

And maybe -- the markets have somewhere else to go let's continue on this conversation right now bringing Gary cal -- CEO cal -- capital management.

I do -- it's good to see you -- day like today I mean I'm curious what you think they're very K you know you've always warned about the Fed's printing -- In the past that inflation coming do you think -- the Fed is the rest of the relative got our hands right now.

Well look I think a lot of this rally since await has been the Fed and -- you really need to do was get out of -- the market.

And just pinpoint where the Fed announced.

QE1 to win three and we -- they.

Initiate it you'll see the market turned every time.

And just go look in last week.

When there was just an inkling that maybe they wanted to take the foot off the pedal.

The market started getting hit that -- a few fed hasn't -- -- Bernanke come out start talking about.

Up -- the money at the 2016.

And that got the market going again so there is no doubt in my mind this is fed driven.

Look of the economy is in OK shape earnings are okay.

Valuations are -- it's nothing special.

This is fed driven my worry is the a box then in the gonna have to keep doing it forever and forever and forever and I don't know what the repercussions of -- -- -- Made it agrees with you on this one Gary KMRS.

Charles Plosser that president Charles Plosser saying that the current round of fed bond buying was a bad idea he has been a bear obviously but also saying that they cannot let the imbalances -- out of control is also concerned about.

Market imbalances getting out of controls I think the two -- you agree.

On that one issue of -- yet and I get a loan to another market.

It's really the bond market.

You know that -- interest rates are just being held down by the Fed they got the court in.

And my big worries bid for a year -- not -- I never know when something's gonna happen is what is bogus even to the market gonna wake up.

Where they're gonna have to change something because I got news -- if we normalized interest rates based on how alleged that -- that how much that we had.

I gotta believe interest rates would be much higher which means the cost the carry the -- higher which means the cost the capitalist fire which means profits a lower.

And that could affect the markets but right now.

-- markets are acting well I have no complaints is -- financials continue to act well that's a great harbinger of things and thus so far so good you.

Also unemployment Jerry can I want to show our viewers -- -- unemployment rate under President Obama for the last four years now you know Ben Bernanke did make kind of -- -- here that he was looking at 2016.

And you say because what we're saying on our screen.

The fact that employment that target by the Fed may not get hit -- 2016.

The easy money continues.

Until that.

And that's what I think goose the market when he said 2016.

That was the -- we got a long -- ago.

And look you would -- -- out statistics from when the Dow was that the the -- high.

Total unemployment was six point seven million it's now thirteen point to.

But the Federal Reserve books is up three trillion dollars that's all pretty -- money so they're re acting to all this again.

I don't know what the final outcomes gonna be I just know Bernanke and Greenspan have been agreed at one thing and that's creating bubbles land of bubbles always crash we sort of no wait I hope I am wrong this time.

But I got one night looking out of that history and expand your side if you look at the -- of the -- after big hits like this one to the positive anyway Gary Kaltbaum Gary Israel of the call -- thanking -- -- say -- Always my pleasure thank you.

Load More