At Schwab Impact, First Conversations Focus on Election and Profits

Kleintop then addressed the issue of corporate earnings, which "have been falling for the last couple of years" but they stopped declining at the end of February. The danger, he said, is that the gap between analysts forecasts for earnings and actual earnings is wider than it's been over the past 20 years. "I'm worried that stocks have been following the declines in earnings forecasts," and that in the short term, "earnings may be weaker than expected.

Kleintop then shared one of his favorite indicators on the economy, the Citgroup Economic Surprise Index for the G10 countries, which has "been going down since July." He half-joked that "when the temperature goes down, so does the economy." So as winter approaches the global economy may weaken, perhaps spurred on by a possible tapering of their QE programs by the European Central Bank and the Bank of Japan.

Then he addressed the topic of trade, with a nod to the Presidential election. Looking at Hillary Clinton and Donald Trump, Kleintop said what's interesting is "not how the candidates are different, but how they're too much the same," with both voicing disapproval of international trade agreements. The value of world trade has pulled back over the last five years, as it did in 2008-2009, but that could be misleading and mask possibly "good buying opportunities." Kleintop said the while the price of oil has gone down affecting the value of international trade, "the volume of oil has stayed steady."

Channeling Mark Twain, Kleintop said the rumors of the "death of free trade has been exaggerated." Many large companies around the world have "gone beyond globalization to localization," selling products where thy make them, such as Toyota building cars around the world rather than in Japan and exporting them.

Corporate profit margins, he said, are in the middle of their 20-year range before concluding that "we're likely to see longer term secular earnings growth over the next 10 years," while globally earnings "are much more balanced across sectors" rather than being concentrated in sectors like energy and materials.

Kleintop finished his presentation by asking where people invest in equities around the world, answering that their's a clear home bias in equity investing. Seventy-five percent of Americans' equity investments are in U.S.-domiciled companies, for instance. The same holds true with Canada and Japan. That's worked out well for Canadian investors since 1999, he reported, though he also said that with its market capitalization highly concentrated in oil-related companies, "Canada is one big leveraged energy ETF. Period." That's true even though its biggest sector is financials, Kleintop said, since it's the Canadian banks that are lending to the energy sector.

Japan is "one big financials ETF," Kleintop concluded, while the U.S. is "one big tech ETF."

— Related: Schwab's Kleintop: Stocks Are 'Vulnerable to a Pullback'