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All right well first guest says mr.
Bernanke plus corporate earnings and guidance will be front and center for the next few weeks he also expects slower earnings growth and cloudy growth outlooks for the rest of the year.
Joining us now permanent portfolio president Michael could she you know Michael.
All what did you make of mr.
Bernanke -- it's pretty much saying the same thing though he says my goodness -- we raise rates the economy is going to spank.
It seems like you know the flexibility is there in the market should like that right.
Well it doesn't necessarily jibe with the Beige Book comments but that's another story now I don't think he I don't think he really said anything new here and I think we're getting sort of tired of the the going around in circles commentary that we're getting from the Federal Reserve and the spokesman I think the reality is that when you looked at the -- forest through the trees.
They've opened up the dialogue about a potential tapering or a change in the mix of their policy tools or wherever you want to call it.
Prepping the markets -- the ground getting us ready for that eventuality.
But I still think they're going to be around for quite awhile when you look at their dual mandate inflation's low unemployment still remained stubbornly high.
And the job numbers were seen are not significant enough it an improvement to knock that rate down anytime soon so I don't think the Federal Reserve is going anywhere anytime soon.
The other thing that was interesting in his comments this morning was that he basically admitted that.
You know I think a lot of the market assumes that the Federal Reserve in the world central banks can control interest rate policy in this sort of command control fashion.
And the reality is that the markets control interest rates and all you have to do is look at a month ago we had that significant you know rise in interest rates and so I think he alluded to that.
And recognize that economic growth is not a lot of cushion a lot of analysts are bringing their numbers down for GDP growth in the second quarter the rest of the -- corporate outlooks remain cloudy.
So there's not a lot of cushion there for -- back slide if you will.
Let's talk about corporate outlooks though -- they haven't been great even -- the banks really seem to be that the lone star in earnings season thus far this year.
But when you get companies like UPS Coca-Cola blaming the weather I mean.
What where you go from here as far as investing what sectors are you look at that -- the financials now on the table for you.
The financials make sense because there interest rates are subsidized that they can make money about margin so I'm not surprised by that -- housing is improving a little bit.
Although a quick rise in rates will cool that off quickly.
I think it depends on your risk profile I mean we run three different strategies and equity strategy which were fully invested.
Given -- money and giving corporate earnings -- providing a foundation that makes sense.
We run and on -- bond fund -- -- keeping durations very low and sticking to relatively high quality there.
And our our flagship fund and asset allocation fund.
We invest in stocks bonds commodities precious metals in the US and non US and we believe that in this uncertain environment while it's not popular right now everybody's focusing on the equity markets in those returns.
A balanced approach may not be a bad idea here.
So volatility is still gonna stick around you believe -- you believe that the Fed will probably start tapering by the end of the year is that right Michael.
I would make no love forecast the other tapering got to -- -- -- not that big of an issue you know I I I wish they started yesterday to be honest I think its benefits are limited and I think get it gives an improper view of the the real interest rate market and we saw that by the manipulation we saw -- last -- themselves.
I think the reality is though until unemployment comes down -- we say real inflation which is a threat down the road -- -- right now.
I think the Fed's going to be around in some capacity.
You know whether it's Fed Funds rate or other policy tools I think Bernanke was very clear about this morning.
Is that it's not clear -- off to the races mean is there anything that worries you that could derail this.
Yeah I eight -- managing corporate earnings and an economic activity.
You know most at this point in the earnings cycle we're still a little reporting so it's tough -- To sort of understand fully what's going on there with.
Companies seem to be meeting by and large for the most part although you don't hear a lot of positive all looks you don't hear a lot of positive forecast a real revenue growth.
And I think that's something that's gonna weigh on economic activity going -- to -- let's face it.
But we've got to bull market equities last forty years I would argue that a good portion -- that was -- reveal a revaluation after only an all night.
I would argue that cost cutting and corporate efficiency have resulted in earnings growth.
Providing that foundation dividend yields have been positive they've been better than bond yields so that brought liquidity -- But the thing you're missing for another leg up.
Is real revenue growth and vibrant economic activity and I do not see that right now on the horizon and -- -- for a long time I.
I'm kidding Michael could yet we have so much for joining us.
We appreciate it thank you.
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