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It's by next guest says a pullback would be -- helping thing for the markets but she remains in those he has -- about our prospects in the markets joining us now we're.
Is Charles Schwab chief investment strategist senior vice president.
-- and Saunders was -- good to have you with -- extra having so that sounds like very cautious bullish statement did tell us what you mean.
But we've -- not apologetic balls for quite some time now but given where sentiment has gotten show.
Really -- of optimism at least based on traditional senate measures.
That tends to be an environment where the market is right for a pullback obviously unbelievably strong gains we've had so.
I wouldn't I don't think it's going to be anything terribly sinister at this point but we're starting to digest.
A move by the Fed to start tapering their purchases in and we -- anticipate that that would bring some volatility weather today was the start of it I think it's too soon to tell.
Too soon to tell but the Fed has been making noises like the time was approaching.
And now we're starting -- here's some conflicting noises from the -- suggesting.
Forget about it Q we on steroid stays -- -- We can see by your attitude markets that -- you you don't love our idea of taking away the punch ball.
What I did think the -- -- putting out some trial balloons here to get a sense of what their reaction mechanisms are to be that's said.
I think there is this perception that the Fed has this plan they know their timing and they're just.
Sending it out to us in in drips I don't think that's -- case I think when Bernanke.
And other fed members talk about the data dependency I think that's absolutely the truth so.
A lot can happen between now -- what is I think the consensus which is that it would -- be no earlier than September timeframe.
But there's no question there's a lot of money in the market that is at play trying to figure out what the Fed is going to do here well.
Is is we look at the at the credit markets that the ten year I mean it's off 49 basis points earlier this -- I mean that's.
That's pretty dramatic stuff but it goes almost without.
Notice in the business press.
And -- and out of the general press.
How are how concerned are you about that and what does it portent.
Several moves higher in the -- area -- about fifty basis points even more in some cases over the last several years and it hasn't turned.
Into that beginning of a more sustainable rise now whether that's the case this time it's it's -- to say we may be closer to the point.
Where we start to see -- grinding higher and yields.
Generally in the early stages of a rising yields.
Environment it does not hurt the stock market you you start with a little bit of volatility.
But the real bite on stocks doesn't tend to come for quite some time until the point where fed policy.
Is really putting on the brakes and starting to impact.
Not only the stock market in the economy but starting to represent for meal perspective significant competition against stocks and I think.
The move we've seen from 16 up to 22 or so I don't think we're quite there yet.
Bond market had a terrible terrible -- and does that mean good things for the market or does that just mean that we're going to see while some bad things for both equities and -- While -- -- environment right now we're generally bond yields -- stock prices are highly correlated another words.
Generally -- via bond yields have been going up the market has been going up as well and I I I think we stay in that environment for a little while it's hard to know at what point.
In the rising yields you get to a level where that correlation moves to inverse and other -- -- rising yields start to hurt stock market.
But what we're dealing with here.
Is a fed who is policy is unprecedented so the unwinding of that policy is also going to be unprecedented it's not a -- -- while.
The first move will be -- Fed Funds rate hike by the Fed which -- always been the initial move in the past we have probably five or six steps in the process before we get to that now will be.
Quite a bit down the road so were really just taking baby steps here I think the Fed is they're being they're trying to be incredibly transparent.
But that also comes apparel because -- going to be some misunderstanding in terms of what they're saying not to mention if you get any kind of volatility in the data it probably translates to volatility in the market.
And is your suggesting and we can say we great -- -- do that investors will be vigilant.
Not so much certainty that they are interpretations of what they have that they witnessed over the next few weeks -- months -- Be necessarily correct.
As -- Saunders thanks for being with us you're always correct -- -- delighted to talk thank you live we got.
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