I want to bring in our guest for the open.
The chief market strategist of a group who is bullish on stocks.
Nick has had a price target on the s&p at 2000. so rice bullis, neck, you are on equities.
There was a recent -- so price bullish, nick, you are on equities.
The after-tax earnings of s&p companies, they found the ratio was just at 1.3, which was a pretty low amount compared to other bull markets.
That chart shows there is room to run here.
That is true.
If you think of how well corporations have done compared to be very weak recovery we have had the past five years, it is very impressive we can get back to very strong levels.
If and when the economy can improve here and in europe, that earnings power should increase as well.
Don't you think the point where coming up to pretty soon where earnings of sort of maxed out?
Quarter after quarter, profits are up, sales are weak.
Margins are at historically very high levels.
There is always a very strong concern over the me into profit margins.
However, i do believe we can get better revenue growth in q3 and you -- and q4. if i have a worry, it is the euro.
It is weaker than expected.
Look at what happened over night or this morning.
Right, economic news has not been good out of europe for several weeks, so my thought process is we will have better than expected results here in u.s. in a little bit worse in europe.
It will all watch out -- it will wash out.
Revenue growth north of 5%. we have to wait until next year.
I keep bringing you back to consumer spending.
I got to do it again.
Weaker than estimated.
Today we have walmart.
To me it all comes back to consumer spending because how are you going to see sales growth if the consumer is not increasing the outlay?
Do you think -- i mean, do you think that is going to happen next year?
What is going to be the trigger for consumers to increase?
Unfortunately, not all consumer spending is created equally.
We have had good news from the auto sales.
Things are going well there.
Hopefully that will have the effect of increasing employment in the midwest as we get into 2015, and that will improve consumer spending otherwise.
You are absolutely right.
Consumer has probably been the most disappointing part of this year's recovery.
Some people are worrying that what we are actually seeing is a new subprime bubble and auto lending.
I covered the autos for a decade in the 1990's, and it is the same is that ever was.
This is the way auto cycles work.
It is not even as high as it was may 19 90's. subprime is always an important component to that market.
Credit available to subprime are worse.
A car is a collateralized loan, so it is not quite as risky as the housing bubble we had in 2007 and 2000 eight.
Where you stand on inflation?
Is that something that you think is going to be a black swan here?
In the sense that yes, we all talk about it, but couldn't actually be the opposite where the pressures do not really come up the way people believe them to be.
I am still worried about deflation, especially considering where europe is and all the treasury curves around the world tell us what we should worry about, and that is deflation.
I am more worried about prices continuing to be under pressure and us following under a japanese type mentality with persistent deflation rather than inflation.
I know there is a lot of money out there, but the reality is, it is tough to gain any traction on the inflation front.
As betty bangs mentioned, mentioned, what do you think will lead us there?
I guess i mean which groups would you be investing in an particular?
Sales growth is so rare, technology have it, so you have to be there.
I would substitute consumer staples for utility.
Utilities had a great run this year, but i think that run is largely over.
Staples of a little you lower yields, while i am concerned about deflation, i think the market will give more concerned about inflation as we get into 2015. it is important to have a hedge against that.
I would love to root for the financials.
I would love to tell you financials are going to work.
Sadly, it is probably not the case this year.
One-story we are all waiting for is the alibaba ipo.
We are looking at the trading debut of september 16. your firm part out an interesting survey of investors that said only 43% are actually planning to buy shares, but 88% think shares will rise in the first month and 64% think it is a long-term investment.
Explain to us the disconnect between everybody thinking this is a good investment but not actually wanting to buy in.
A fascinating study to see the results from because what we found out as people uniformly or almost uniformly agree it is a very good company, well-run company, great profit margins, checks all of the boxes.
Yet have to not want to buy it.
In order to make that ipo successful, to make the tent as big as possible, you have to pull in a lot of people who have not historically bought chinese companies, who may be looking at that and say yes, i understand why it is a good investment.
They would be comfortable with the business strategy, with the growth ross fax, it was very -- with the growth prospects.
It was very wise for them to push back.
It will be critical to the ipo.
We're talking about a serious topic here, guys.
Let's liven this up a little bit.
Nick, you might appreciate a story like this.
The oxford american dictionary, with new words that they added to their lexicon because we are just creating new words every day with social media, things like yolo, amazeballs -- i say amazeballas.s. what does that mean?
That means amazing.
Why not just say amazing?
What is smh?
I don't know.
Oh, shaking my head!
The lot on twitter.
Do you talk like that, nick.
I try not to.
We didn't put out a note that was about 500 words this morning on ufo's that i was thinking what on earth is nick thinking?
I became intrigued from when ufo's began to be a thing, and it was right after world war ii during the cold war.
You have to think about bubbles and things all the time in the market, so it is not exactly engender -- imagine what it would do now?
You know what the response to that is?
I did not say anything!
I did not say anything!
[laughter] coming up, we will continue our coverage by speaking with a franchisee who is going toe to toe with the corporations.
Plus, remember last year we asked mcdonald's and ceo don thompson defeats fries?
Now his rival says they are getting rid of its healthier satisfries.
I cannot give up fries, so i
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