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I want to bring in market watcher Ryan Payne, Ryan welcome back good to see you

2020-01-04

Again Stewart. We've had people on this program that's today, saying the fed's not gonna cut rates at all this month what do you say Yes you have a hundred percent odds traders are betting that's gonna happen. Remember, with the markets it's always definitely maybe, right Definitely they're gonna cut rights but maybe they won't. You don't think they will I don't because remember the market does it's best to confound the majority and when everybody thinks something's gonna happen 100 percent of the time I'd be very very wary and the other thing you have to think about is the feds said they will do what it takes to sustain the rally that's very vague language and last time I looked economic data keeps coming in better and better especially the jobs number last week so it's gonna be very hard for the Fed to justify a rate cut here. So you're saying probably no rate cut this month and are you also saying we don't need one this month exactly I think that's the thing that you know keeps coming in better and better as the economic theater because economists have always discount the market so far this year just like analysts keep discounting earnings so I think for those two reasons yes I think as long as the economic data is strong there should be no rate cuts okay now what about the second half of the year we just got into it as of the last week what about profits because that is really the driver of the market even more than interest rates I would say profits where are we going with profits second half of the year I'm wildly bullish and it goes back to I was just saying you know analysts have a zero percent expectations of this quarter for earnings zero percent earnings is what they're expecting remember the last quarter they said negative earnings we didn't get negative earnings so my guess is surprises will be in the positive again there'll be another catalyst for stocks so how much of an increase year on year the second half of the year how much will profits be up compared to the second half of last calendar year they're gonna be up a lot less but remember we had that big tax stimulus last year now we're getting back to a more normal type of increase in earnings which would be It could be 3 or 4 percent which is a little low but again with expectations maybe going up more than what analysts think it could be even better than that I think just good news in general will be a catalyst just because we're expecting not great news in terms of earnings growth since the market go up in lockstep with profits so if you get a 4% increase in profits compared to last year, do you get a 4% jump in stock prices I say even higher just because right now think about it but eight trillion dollars sitting in savings accounts right now it's like a powder keg you know investors been getting out of the market this year even with the S&P up 20% you've had money going to the bond market in droves which I think some real issue I've talked about that before so my fear is if you're sitting on the sidelines right now you know economic data comes in better earnings come in better than expected and then all of a sudden it's like man I got to get in this market you get everyone coming at the same time and that could melt the market of much more than earning growth. So you are still talking about a melt up as a possibility later this year absolutely where is it what's this eight trillion in savings accounts comes from that's like bond funds and bank savings accounts and CDs all that kind of stuff isn't it that's more just that's not even bond funds bond funds that's a whole nother story but if you just look at cash or money market funds right now it's 8 trillion earning you know under 1% on average which is just insane that's an enormous amount of money it's only got a 20 trillion dollar economy and 8 trillion dollars in savings cash accounts that's extraordinary it's extraordinary if you think about it after 2008 people are just so so fearful they just never got back into the market in a big way in fact stock ownership is down about 10 percent the last decade so Ryan Payne says a melt up could be coming because that 8 trillion is gonna move en masse into the market. You heard it here first Stewart. I heard it right from you so all right Ryan that was good stuff we appreciate you being with us thanks. Stuart thank you.