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Cheap oil becoming a tailwind for consumption

Thursday, March 31, 2016 - 04:13

Oil's handcuff on the stock market is beginning to loosen, says U.S. Bank's David Schiegoleit. He sees stocks grinding higher in the second quarter. Fred Katayama reports.

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Stocks rising in quiet trading on the last day of a tumultuous first quarter. Let's look at what's to come and David she Goliath he's the senior portfolio manager US banks private client reserve and he joins us from Los angles here. Welcome David now energy stocks among the leaders today but you'd think the market shifting and will continue to shift away from its preoccupation with oil. Why so. Well. A quarter we obviously saw a handcuff oil equity prices at hand cup starting to at least loosen. The consumer is starting to show signs like we're looking at things like apt. Credit card spending in some of the consumer data that's come out it's still a mixed picture but. We are seeing signs of a pick up and consumer spending and that would mean we would see it it from. Low oil prices being a head wind to stocks in the economy to mobile oil prices actually be coming ate away and four. Stocks and the economy. War in going forward. The next focal point could be earning season but many strategies that doctors in the numbers won't be they want services analyst with spot what's your. Yeah in the upcoming earnings season. Does hole while it winds we think he's somewhere between 78%. Decline. I in S&P 500 earnings would be the fourth consecutive quarter. And it and it fortunate I don't know that stocks have fully priced in that decline in earnings were still looking at a forward PP. On the high side of normal towards seventeen. That seems to me it rich on March to war stocks have fully discounted in fourth consecutive quarter. Decreased earnings. Another fact that it could that's not the Fed we are gen you don't think her consciousness raising rates now in contrast. The number one hock it. And countless other oh all what you you know how many iTunes news here and win. Yet we still see a hike in June followed by one in December that is our base case scenario. However Chad Allen's recent comments do certainly lend credence to an argument that we may not even see one you could be forced out for. However if you take out all of the Fed. Official comments. In not in aggregate and you look at them there's still a lot of FOMC members that are striking more hawkish tone. So we do is still hold that base case scenario. But as any talent continues to make these toughest comments. You know there is less and less conviction that frankly. It was so early get a forest. Energy becoming now he'll win some headway in. Earnings may not be good first quarter and defend well possibly too low rate hikes. What does that mean for stocks that oh yeah. Yeah overall throughout. The balance of the second quarter and as we expand out in the second half of the year we do believe stocks. All grind a little bit higher from here. We still see about a 212150. S&P five under for the end of the year. But frankly it's not going to be smooth ride. It's not going to be. Eight you know sideways right we're going to see Craig continued ballots volatility. With earnings and with that announcements. So we will end up a little bit higher towards the end of the year but it's not going to be comfortable ride and quickly that little time left jobs report comes out Friday what are you looking for. You know if we were to see 200000. Or higher simply I do believe that would do away. Increased impetus for that June rate hike. But frankly the they continued streak. Good jobs numbers we've seen over the past couple of months. Gives us a little bit of room on the down side we points I don't think it down side. Track okay thank you for these. Thank you our thanks to David fetal life of US bank I'm for an ailment this is.

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Cheap oil becoming a tailwind for consumption

Thursday, March 31, 2016 - 04:13