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00:00HERE TO MEET WITH US IS CHARLES LIEBERMAN. WHAT ACCOUNTS WHAT SEEMS A DISCONNECT BETWEEN ALL THAT ' S GOING ON IN WASHINGTON D.C. AND WALL STREET? THERE DOES SEEM TO BE A LOT OF CHAOS. > > THERE IS A LOT OF CHAOS. IT ' S MAKING THE NEWS. WE GET REPORTS EVERYDAY. YOU HAD ANOTHER ONE A MOMENT AGO. BUT THE FACT OF MATTER IS, STOCKS GETS VALUES FROM THE PROFITABILITIES OF THE COMPANY. > > YOU WRITE ABOUT THIS IN THE PIECE, YOU SAY INVESTORS ARE WELL AWARE OF THE SHOCKING NEWS OUT OF WASHINGTON. IT MATTERS TO EQUITY EVALUATIONS ONLY TO THE EXTENT IT UNDERMINES THE ACT OF -- ABILITY OF COMPANIES TO GROW. > > THEY CONTINUE TO AT COST. IF YOU LOOK AT THE WAY HIRING IS TAKING PLACE. COMPANIES ARE NOT HIRING THAT MANY WORKERS PER MONTH. THEY HAVE A LOT OF JOB OPENINGS. IN TERMS OF PROFITABILITY, YOU CAN GET A SENSE OF THAT BY LIKING AT THE RISE IN GDP, WHICH GOT REVISED UP TO 1.2%. CORPORATE PROFITS IN THE FIRST QUARTER WERE UP TEN TIMES OF THAT. > > IF YOU THINK IT MARKET IS UNLOVED. WHY IT IS SO? > > IT IS UNLOVED. IT IS PROBABLY THE MOST HATED BULL MARKET I CAN REMEMBER. LOT OF PEOPLE MISSED. THEY GOT BURNED IN 2008. THEY PULLED OUT. MANY OF THEM NEVER GOT BACK IN. THAT ' S A PROBLEM. THEY LOOKED A THE RISE IN STOCK VALUES. THEY WANT TO BE THERE. THEY MISSED IT. THEY TRYING TO FIGURE OUT SHOULD THEY GET IN NOW OR IS IT THAT MUCH MORE DANGEROUS BECAUSE VALUES HAVE RUN UP SO MUCH. > > COUPLE OF WEEKS AGO WE SAW THE VIX TICK UPWARD. WHAT DOES THAT SAY ABOUT THE LEVEL OF COMPLACENCY. > > IT MEANS THAT THE MARKET CAN BE VOLATILE. IT DOESN ' T TAKE A LOT. IT ' S NORMAL FOR THE MARKET. IT DOESN ' T TAKE MUCH IN TERMS OF NEW INFORMATION TO PUSH PEOPLE WHO ARE SKIDDISH TO BEGIN WITH -- TO GET THEM TO SELL AND BUY. YOU SEE THAT. IT GETS BACK TO WHERE IS THE ECONOMY GOING, WHERE IS CORPORATE PROFIT GOING. THE ECONOMY SHOWS NO SIGN OF ANY PROBLEMS. LOOK AT ALL THE PROJECTIONS. BUT -- NO ONE SEES PROBLEMS IN THE ECONOMY NOW. EVERYONE ANTICIPATES MORE GROWTH. THE FED IS DOING NOTHING TO UNDERMINE THAT. THEY ' RE RAISING RATES SLOWLY. BUT LEVEL OF INTEREST RATES IS STILL LOW. INFLATION IS CONTROLLED. THERE REALLY IS NOTHING OUT THERE THAT ' S VISIBLE THAT WOULD SEEM TO BE A SIGNIFICANT HURDLE FOR THE MARKET. > > IN -- IRAN CONTRA, FASCINATES THE PRESIDENT. IMPEACHMENT TRIALS OF PRESIDENTS. WHAT ' S THE BAR WHEN INVESTORS HERE IN NEW YORK DO WORRY ABOUT WHAT ' S HAPPENING IN WASHINGTON D.C.? THERE ARE SOME WHO THINK WE MAYBE HEADED TOWARD AN EVENT OF THAT MAGNITUDE. WHAT DOES THAT RISK BECOME REAL? > > IT HAPPENS IN BOTH DIRECTIONS. WHEN SOMETHING HAPPENS IN WASHINGTON THAT IMPINGING ON ECONOMIC GROWTH, CORPORATE PROSPECTS, THOSE ARE THE THINGS THAT MATTER FOR THE MARKET. FOR EXAMPLE, THERE ' S A LOT OF HOPE FEW MONTHS AGO THAT CORPORATE TAX RATES WOULD GO DOWN. LOT THAT HOPE IS VANISHED. IT DOESN ' T TAKE MUCH OF A REDUCTION IN TAX RATES TO HAVE A HUGE IMPACT ON THE MARKET. USE A SIMPLE NUMBER, LET ' S SAY 35% MARGINAL TAX RATE FOR CORPORATIONS, IF THAT DROPS BY 10% TO 25, THINK OF THE INVERSE. THINK OF RETENTION GOING FROM 65 TO 75. THAT ' S A 15% RISE IN PROFITABILITY. STOCK MARKETS WILL BE VERY CHEAP IN THAT CIRCUMSTANCE. THERE ' S LOT OF POTENTIAL TO AFFECT THE MARKET. BUT AS LONG AS THE PATH IS THE SAME, AS LONG AS GROWTH

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Why We're in the Most Hated Bull Market

Charles Lieberman, Advisors Capital Management chief investment officer, explains why many investors have missed the bull market. He speaks with Bloomberg's David Gura on "Bloomberg Markets." (Source: Bloomberg)

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