Should investors put new money to work in the markets now?
Should investors put new money to work in the markets now? Are bracing for the biggest week of 3rd quarter earnings, yet this week I downed up shows up better than 90 points ahead of all of these earnings coming out alphabet all set report. Those are NASDAQ companies in the NASDAQ is up this morning. As you see all the numbers coming out from a number of companies – caterpillar McDonald’s – also a Market Movers there. Thank you so much for joining us this morning. What are your expectations for earnings and heading into the earnings season? Is it priced into markets? Will Maria good morning – and I think what really people want to know what the market wants to know going to be good overall 20 % – maybe a little bit more than that. But I think what the market really wants to hear about is what’s going to happen in 2019, because clearly, earnings growth in 2019 is going to be nowhere near what it is this year and then Porsche in a what’s the cost. What what are these tariffs doing? The cost is there wage pressure, anything that affects margin, so I think that’s what’s really more important than the absolute results, because we know they’re going to be good results what’s happening in the market right now. That’S that’s. Obviously, the dislocation seem to be about one of those costs and that’s the rising cost of capital right going up. But to me it doesn’t seem like the fat is really. You know making a mistake here, giving that info about two and a half percent over the last 12 months, but they’re fed funds rate is still below that. So it’s negative on real terms where the market goats for the next year, it seems like we’re only at 4 %. So far this year we have another year next year was only up a couple perset. Well, I think they’re looking for a hike in December, which is certainly directing the market tour they’re, also looking for a three more next year, so, basically, between now and the end of 2019, looking for 4 more Heights from from an equity strategy point of view, you Know we think that that you know that’s really your ear kind of at the red fine and I think the market is going to be very sensitive to any hint or conversation or enthusiasm out of Jay Paul that that you know hey, we might increase the the Pacer, which I think would the market would not take that very well as far as the S & P, 500 right now, at least based on our analysis. Stocks are pretty close to fair value. Our urine Target’s been 28 to 2900, we’re just a touch below there and, I think, probably over the course of next 12 months, or so. You could see the S & P 500, let’s call it 8 % higher than where we are now it’s now. So, even though we think stocks are pretty fairly valued right now still think, there’s some upside here still think the bull it is not over. We still want to lean towards those sectors that are sensitive to a continuation of the recover. We don’t want her clients hiding right now had one for the market, noting that third quarter sales are expected to Abby up 7.3 % from the same period last year, this for the S & P 500, but that is the lowest rate for the S & P And four quarters – and certainly Isabel, has been on this program and voice her concerns as well about that last quarter. I have to say we’re looking for about in a second quarter, we’re looking for about 8 % growth and it came in close to 10. So our number for this third quarter reporting season was 8 % at work touch below that. So I would consider really anything that you know at this point in the cycle. Anything. You know your six to eight to Baby 969 percent earnings growth growth. Rather, I think that’s good and I think next year, but you’ll probably see something at the lower end of that range. But I think that’s what the market expects it’s it’s probably priced in and really you know 7 or 8 % it’s growth in the third quarter. I don’t really think that’s going to bother investors weeks, but right now I think you’re at a point where, if you have money on the sidelines, you need to start legging in and if we trade a little bit lower here, you should continue to do that. Show if you have a certain amount of money at these levels, then, and if we go a little bit lower step in with another third. Because, if, if, if, if you think as I do, that a trade war is unlikely that we’re going to continue to see decent International grow, that’s based on what are Economist or looking at all we’re going to see decent growth here in the US than the Ford Fundamentals, look pretty good and we want our clients stepping in here and and getting exposure if they have cash on the sidelines. WFC Senior Global Equity Strategist Scott Wren on the state of the markets.