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Marketplace Discounting Risk of Recession

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  • Description

    Fifth Third Asset Management CIO Keith Wirtz weighs in on the current market environment.

  • Duration 4:13
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Alex go to -- the works is the chief investment officer at fifth third asset management currently sixteen billion an asset management I think a lot of this He has got to be.

Europe concerned about the banks over there but as David said at the top of the show.

We're not doing great leader of the Philly Fed which which is disastrous this morning so from your point of view where you sit.

Do you re price what you -- it for a recession at this stage of the game in the United States.

Whether we re price our securities that we hold are not the market's doing that for -- clearly over lasts four to six weeks this marketplaces discount of the risk of recession.

Is trying to put a price on Ford earnings right now minutes -- their expectations.

This market has adjusted for a higher risk environment that's what we're seeing a stock prices.

I think what we've been doing most Connell was that we've been looking at our holdings.

And we've recognized that this market's been very indiscriminate.

That stocks are going down fast talks as best we read things so we're changing our mix but we have been -- the -- what is changing the mix look I mean what if it's tough to get a mindset that's anyway logical in an environment like this is I'm sure you well know over the last.

We could Jewish just been it's been crazy if we come down a few days were back at -- today what is changing the mix mean.

Well for one -- -- worth thinking we should focus on the quality factor here is it's an opportunity in the market condition -- everything's going down.

To upgrade the holdings in your equity portfolios look for quality factors.

Fundamental quality good balance she condition as one example of how you can upgrade that holding out of your portfolios because good stocks going now now -- another -- Aspect there were leaning honest look in those segments of the economy where you think you have confidence in earnings they might be health care for example might be consumer Staples.

Technology for a while has had a fairly resilient earnings pitcher and those of the areas of the economy.

There will looking to move towards as we invest what's the worst cases situation that you got to prepare for coming out of Europe in terms of how it affects your investing here.

In the United States because a lot of people were were thrown off four or getting a lot of attention the Wall Street Journal article this morning says the Federal Reserve's at least looking at.

The US arms of these European -- see how much cash they have what what they can withstand.

Are you thinking about something like 2008 where we see -- seize up in a you know in lending.

Or is it is it you know it should we not even be talking in those terms at this point what's your take on it.

Well the Cummins Sweden this suggested that there are some liquidity problems with the banking sector over there gave us some pause you know maybe that's the biggest concern we have is that.

The European financial sector locks up.

And freezes the banks refuse to do business with each other and you get the -- affection of the US financial system.

And that might lead other macro problems that we experienced in 2008 again so that's our biggest concern is what happens in your bank and European banking sector.

Do we have another financial crisis to have to endure -- we don't think that's the case that.

You don't think it's and that's the case with the but we're watching it closely and we've actually in our exposures and -- -- away from European banks just to be prudent but what real quick keys are we here in the United States better prepared -- in terms of our banks are capitalized on I kind of think that we were back that.

No doubt about it known since 2008 our regulators have required.

I'm higher on capital standards on greater liquidity standards on the US banking system that had not been the case in Europe and so.

We think the US banking systems and a stronger position than what may be the condition right now in Europe.

And so we're less concerned about the US banking system.

In fact a lot of the regional banks -- set don't have direct exposure to the European problem.

So maybe the reason there's -- -- -- going now as pure macro then may create.

I'm may be a buying -- for those who want -- go in early but the basic -- much stronger in the European banks thank you but that they're being more kind of interconnected maybe than ever before the idea that.

If it happens there even if for well capitalized it certainly a big event even if there's not a huge crash.

Would you agree I think I think the European I think the European Bank problem really represents more from macro risk does European recession still want to conditions here in this country out as well as global growth and that's what's been priced in the -- place right now as the risk of recession -- -- -- today thanks for helping us through all this keep where it's at fifth third thanks for coming out.

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