Cannot Trade On 'Pure' Earnings, Princeton Securities' Willis Tells CNBC
NEW YORK (TheStreet) -- The equities market is currently being driven by central banks and the Federal Reserve's decisions on interest rates, not earnings, Princeton Securities' Ben Willis said on CNBC's "Closing Bell" Thursday.
"As much as we would like to, as equities traders, trade on fundamentals and pure earnings, that is not going to happen for a long, long time," Willis predicted.
The equities markets will be driven by central banks and the "continuation of their attempt to unwind" from the negative Fed interest rates, which proved to be "absolutely disastrous," he continued.
"The fact of the matter is, the central banks are driving investors into equities where we should have been for quite awhile frankly," Willis stated.
The price earnings (PE) ratio of the S&P 500 has now rallied 17.1 times earnings, the highest level it has been at in 10 years, but that number is still not high enough, he commented.
"Seventeen and a half times forward looking earnings on a yield curve and against negative interest rates is not even close to being unprecedented," Willis said.
To be unprecedented the PE ratio has to be near the 20-25 range and that is "still a long way" out, according to Willis.