We have a dichotomy in the market:1.We need to see better macros,and 2.We need to see something better out of Euro policy makers.Our bias is to believe that the longer this continues,the weaker the numbers will be;our bias is to the downside.
We need more clarity out of policymakers,both U.S. and European-but especially European.I'll believe it when I see it.We haven't seen any evidence they are taking concrete measures.Given the 17 parliaments,it's by definition a slow process.
We favor U.S. equities such as consumer staples and defensive cyclicals such as tech.There's a lot of risk with industrial cyclicals and energy.Materials and industrials are lagging.
Over the next year or two,China will see 7-8% growth.It's not falling off a cliff,but slowing.Near term,event risks out of Europe and decelerating GDPs get us quite concerned about global equity markets.Medium term,we are constructive on equities.
Jeremy Zirin is Chief Equity Strategist at UBS Financial Services.UBS offers wealth management,investment banking,asset management and business banking services to clients worldwide,as well as retail banking in Switzerland.
Wednesday, September 28, 2011
Wednesday, September 21, 2011
Leading Economist Analyses Euro Debt Crisis
The swap lines that have been set up between central banks are positive,according to C.Fred Bergsten,Director of the Peterson Institute for International Economics.They show that the Federal Reserve and the Europeans are in communication.The European banks are in need of more capitalisation.This kind of thing buys time.
The European Central Bank has indicated it's not gonna let someone go belly-up,making a Lehman mistake.The Europeans have created this European Financial Stability Fund,which is an embryonic European Treasury.It's something like the U.S. Troubled Asset Relief Program.On the financial support side,I think they're moving in the right direction.
The strong Europeans deserve criticism.The strong Northern Europeans need to take expansionary measures.The Germans have an overwhelming interest in preserving the euro and the European Union.They are the ones who have the heft to make things happen.
The Europeans need to get on a clear path toward fiscal unification to go along with monetary union.In the mean time,the ECB needs to lend to governments and banks to keep the financial system afloat.A two-track strategy is needed,Dr.Bergsten believes.
C.Fred Bergsten has been Director of the Peterson Institute since its founding in 1981.Before that,he was Assistant Secretary of the Treasury for International Affairs from 1977-81 under President Jimmy Carter.
The European Central Bank has indicated it's not gonna let someone go belly-up,making a Lehman mistake.The Europeans have created this European Financial Stability Fund,which is an embryonic European Treasury.It's something like the U.S. Troubled Asset Relief Program.On the financial support side,I think they're moving in the right direction.
The strong Europeans deserve criticism.The strong Northern Europeans need to take expansionary measures.The Germans have an overwhelming interest in preserving the euro and the European Union.They are the ones who have the heft to make things happen.
The Europeans need to get on a clear path toward fiscal unification to go along with monetary union.In the mean time,the ECB needs to lend to governments and banks to keep the financial system afloat.A two-track strategy is needed,Dr.Bergsten believes.
C.Fred Bergsten has been Director of the Peterson Institute since its founding in 1981.Before that,he was Assistant Secretary of the Treasury for International Affairs from 1977-81 under President Jimmy Carter.
Wednesday, September 14, 2011
Assessing A Possible Greek Default
The consequences of a Greek default are being gauged by thought leaders in world financial capitals.Komal Sri-Kumar,Chief Global Strategist at TCW,says that,if Europe crashes,you're looking at the banking system being under very severe strain.As long as that is unknown,I think you're looking at a bit of trouble here.
Moody's,the ratings agency,downgraded the creditworthiness of two of France's three largest banks,Societe Generale and Credit Agricole,because of their exposure to Greek debt.The third bank,BNP Paribas,escaped the demotion.
You cannot just have Greece defaulting and everybody else doing fine.Greece defaulting will cause a series of defaults.If that happens,the impact on the U.S. economy and market will come from the financial system.It's gonna be even more difficult to get a mortgage in the U.S. because the Federal Housing Finance Agency is suing the big banks.
Dr.Kumar has said he believes we are already in a recession.He's staying with high grade fixed income for the next 2-3 months;after that,it's defensive stocks.
TCW,the Trust Company of the West,offers institutions and individuals a broad range of investment strategies.Since 1971,it has been committed to serving its clients through fundamental research and superior customer service.
Moody's,the ratings agency,downgraded the creditworthiness of two of France's three largest banks,Societe Generale and Credit Agricole,because of their exposure to Greek debt.The third bank,BNP Paribas,escaped the demotion.
You cannot just have Greece defaulting and everybody else doing fine.Greece defaulting will cause a series of defaults.If that happens,the impact on the U.S. economy and market will come from the financial system.It's gonna be even more difficult to get a mortgage in the U.S. because the Federal Housing Finance Agency is suing the big banks.
Dr.Kumar has said he believes we are already in a recession.He's staying with high grade fixed income for the next 2-3 months;after that,it's defensive stocks.
TCW,the Trust Company of the West,offers institutions and individuals a broad range of investment strategies.Since 1971,it has been committed to serving its clients through fundamental research and superior customer service.
Wednesday, September 7, 2011
Newsletter Publisher Sceptical of Euro Fund
Mark J. Grant,publisher of the "Out of the Box" newsletter,which is read daily by some 5,500 financial institutions,is sceptical of efforts to resolve the European debt crisis.It's a solvency issue for the banks,Mr.Grant said.They have 4.1 trillion dollars of debt to roll over.The response has been that we don't need to recapitalise the banks.
The European Financial Stability Fund,or EFSF,is a convoluted effort.It is virtually impossible to come up with any solution.There is not money enough to support this effort.There is not enough available to bail out Italy and Spain.
The markets are all interconnected at the international bank level.Any blow-up in Europe could have a substantial impact on the U.S. banking system.The European Union and China are manipulating the currency market,Mr.Grant believes.
Mark J. Grant is Managing Director of Corporate Syndicate and Structured Products at Southwest Securities.He has also written a highly regarded book,"Out of the Box and Onto Wall Street."
The European Financial Stability Fund,or EFSF,is a convoluted effort.It is virtually impossible to come up with any solution.There is not money enough to support this effort.There is not enough available to bail out Italy and Spain.
The markets are all interconnected at the international bank level.Any blow-up in Europe could have a substantial impact on the U.S. banking system.The European Union and China are manipulating the currency market,Mr.Grant believes.
Mark J. Grant is Managing Director of Corporate Syndicate and Structured Products at Southwest Securities.He has also written a highly regarded book,"Out of the Box and Onto Wall Street."
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