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About -- going out like a -- stocks ending up.
-- luring the Dow posting its largest quarterly point gain in history.
And the S&P 500 finally hitting a new all time high but what about the economy while some areas are improving.
Just this week we -- jobless benefit claims moving up new home sales slowing down and it he read on business investment plans raising a red flag.
So is Wall Street signaling a -- Or ignoring -- coming bots hi everyone I've read about this is bulls and fans let Iraq -- Golden bears this week we got Gary Smith Tobin Smith Jonas Max Ferris John Layfield along with Julian Epstein welcome everybody I'm okay John -- Or boxed.
Unfortunately -- -- I believe Abbas -- -- that wasn't the case are few positive things going on the economy but what.
Long term structural unemployment not cyclical unemployment and anemic growth what Gary be brought up a few weeks ago but the market is detached from economic reality United States is holding true the market has been an incredible run.
I don't think anybody in the country would argue that.
The economy is -- an incredible run so you do have an obvious detachment.
Don't think that's going to change.
OK -- sometimes people consider Wall Street to be what's called a leading indicator that's kind of like -- -- crystal ball for the economy do you see the economy.
Starting to -- -- John makes a good point in some ways it's a tale of two cities if you look at unemployment we're somewhere between.
A 150 to 200000 new jobs a month on a six month average.
GDP we're looking at about 2.3 percent growth in the first quarter which is pretty good.
The stock market as you pointed out where fourteen we were at seven some years ago so I think all those things are good I would know.
However that CBO everybody's oracle says that the sequestration.
Plan we'll take about one point 5% off of economic growth this here.
But to John's point I think the important point is this the labor market is the most troubling thing not just because of unemployment but because we've seen -- wages they stagnant for twelve years right now.
Consumer spending is 70% of the economy so it's not just people don't have jobs it's the people that do have jobs that have economic insecurity that middle class.
And neither party neither Republicans -- -- Democrats really have a credible problem to deal with.
This labor wage this wage stagnation we've seen for the last twelve years.
Well old Jonas.
Wall Street makes people if if Wall -- is that people have more money in a 401 -- they start to feel a little richer or long term housing market seems to be going up aren't those.
Good indications for the economy they are there -- a wealth of fact if you if you're 41 K balance is higher than it was before the last crash in this record is really.
Cheaper than the last records of last fifteen years in the market because we really only eaten up.
This crisis that you were -- throughout this record breaks and we're not gonna averaged a depression anymore like a lot before calling for.
Isn't -- bargain -- these negative you're talking about are real that's why we're not doubt eighteen or 191000 of all these problems were gone we get much higher levels in the market right now it's not.
-- wildly overpriced market compared to that the market isn't tied to unemployment is tied to earnings and that is -- record highs.
-- the stock market all the things being equal should be -- record levels.
But tell me out of its offense at the Wall Street has predicted six of the last three year recovery is -- it's not really that great McChrystal Wallace.
Well you know it's up -- about remember that anybody's let's -- show -- long we've been doing it knows that the economy in the stock market.
Are never correlated except but one moment -- -- right at the top and then right at the bottom and so we're we're not near the top nearly.
What has happened though is we've gotten 506.
Interest rate cuts around the world of federal bags.
We've had seventeen trillion dollars of cash money as LA bill would say created and put into the system.
We're out we're gonna go out it's not going to employees' pockets -- -- -- -- says.
It's got to -- a corporate coffers it started higher earnings it's got to go up a lot of parts of the economy but the market is telling us that we are not in a a recession not ahead.
We're not going fast we're not go in slow.
Earnings are driving this thing and -- -- -- okay Gary -- what do you watch to jets the economy what's it telling him.
Well -- -- I watch three things one isn't as couple be able said the stock market look you've ever won.
In the in the US was invested fully in the stock market we be more now but I think only about -- right percent of population is invest in the stock market anyway so.
You know to your point I don't look at those I look at unemployment -- look at housing prices and I look at household network that's the thing.
That matters for most people yeah.
You look at unemployment Brenda you know that U six number that takes and that.
-- count people that have stopped looking it's still about 14% it's down from its peak that's good but it's still way up.
Since 2008 you look at.
Housing prices they've been up lately and that's good but -- inflation -- just sit still well below their peak there's still a lot of people in the country.
Below water household network that's popped up lately and that's good but again inflation -- still well below its all time high so.
What you have is -- an economy I think by those indicators slightly improving.
But kind of right between what did -- was saying moving sideways and I I think -- -- are moving sideways for another five years.
-- I hate it I hate to agree with everybody on the -- over I think everybody's base salary right I think that.
-- is making a good point about the housing market is gradually improving.
The point that was also made about the are those Gary -- At the point it was also made about -- the stock market reflecting earnings I think is exactly right.
It doesn't necessarily reflect what's going on with the middle class and the stress the middle class is under so.
If earnings are doing very well and lots of companies -- sitting -- a lot of cash.
But those those desserts are not being spread out amongst the population generally that the -- late -- point there's a structural problem here how can the economy be doing so well.
But so few people kind of participating in the big -- And -- -- -- -- -- I don't insult our -- -- company's stock market be doing so well there is so -- -- -- issues but these companies don't just doesn't give me handing money from the Fed and taken is probably they are selling stuff to Americans if they were really got off there wouldn't -- record profits and all these companies to they would be stolen stuff to people at a profit they wouldn't be buying things so.
Is it -- boom times of alzheimer's 1990s now but.
It is a time that people are buying things and are comfortable doing -- -- levels well.
They're selling just in the global market -- well the global market is having trouble too.
But -- could also have profits by cutting costs and that's what companies have done wanted to bring up their bottom line.
Yeah a lot of company to cut also what happened in the Internet boom in the late nineties -- you had these great companies.
Cisco and apple Amazon emerged because.
They were able to cut costs and they were able to what are some bad times that's what you're seeing right now.
One of the greatest thing that happened near the financial crisis is what the government guarantee bank deposits so when you have something like cypress people look to the United States.
And what Jonas talks about historically the market being undervalued is true.
And it probably should have summed -- -- safety premium put on it which means you probably have a lot further run for the market not necessary for the economy going for.
As a tubby with people and people with that money in their 401 -- -- they gonna get -- on -- Until people have been scared remember we've had two crashes so if you look at the participation rate you look at mutual fund inflows and outflows we actually haven't had very many people participating in this deal yeah other pro NK is -- -- they they don't really trusted you see that in in spending patterns.
But but I would go back to remember that.
That the you know this middle class economy in the corporate earnings are somewhat tied it and we at Wal-Mart come up as we can say that.
The other -- -- so many people back they're not -- their shelves as quickly as against the new that's going to change because times are not bad and you were just getting slower and slower devout aren't other figures remember.
You know we had thirteen trillion dollars a welcome back in 2008 it went down to seven we're -- -- -- even guys we are a lot of long way to go.
Hey Gary be the bottom line is consumers have to spend to get the recovery now.
Well they do have to spend Brenda but here's the problem and it just came out with a jobs report we saw it.
On on now Friday.
All the jobs that we're at it now with the they were all.
Part time jobs that's the that's what the job -- -- I think someone mention that companies are cutting back on cost that's a problem you can't.
Go out and and hope to move into a bigger home and spend more you say oh my god tournament of a full time job.
I've a part time job that's why we're moving sideways people have worked -- finding more work.
It's a stock great war.
That's right that's right part time -- low income jobs that's right.
And just one other word we mentioned internationally anyone -- -- we should stop and point out when there's something good to feel about something good to.
Feel about what our government does and if you look at what we did with a TARP when the financial industry was ready to go belly up.
That was a very successful program and ended up making taxpayers money.
Look at what they're talking about in Cyprus right now they're talking about having the depositors.
Have to write down their -- small large deposits which is a disaster site has anything.
They'll make investors -- faster it's that our pets are really clumsy -- we had a pretty good plan -- -- people should feel pretty good about the.
All right John I got to let you take that -- on quickly.
And look what evidence -- was a mainly dictated by the EU and that's one reason this driving a lot of liquidity.
To the United States.
I think that the big guarantee the bank deposits has coming backing guaranteed we are safe haven.
Okay -- fact that -- the last word.
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