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James Dailey, Team Asset Strategy Fund Portfolio Manager, gives his outlook for the markets and where to invest.
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All a -- and James and this right now and you say that the US has led the world into an economic slowdown.
But James that's not what the president said in an interview with Hispanic journalists -- -- analysts that us.
Some of the challenges we've had over the last several months actually had to do with the fact that in Europe we haven't seen.
Them deal with their banking system and their financial system is effectively continue to.
So James do you think that the president is trying to make Europe -- scapegoat here.
Well I think that's politics 101.
Don't blame the president for being a politician.
We try to focus on objective evidence and empirical evidence of what's been going on in the economy in the financial markets and when we look at our objective indicators it's clear that the US was the first major economy to start slowing.
It appears that the US will be the first major economy.
Either -- a recession as we speak or will be very shortly.
And Europe is likely to follow -- that happen when.
Parts of Europe who've already been in recession or depression.
Southern economies -- -- the epicenter of the crisis the key is whether and when France and Germany.
-- recession and I think that that's an increasing likelihood of follow.
The US economy.
Can I just ask you know you I hate this certainty this growing certainty.
That we're going to -- section because that -- never gets in trouble for predicting a recession haven't.
Cannot better than that you instead get in trouble for being bullish than having it come out worse but now we've got.
Job losses in the key thing that they government looks -- said this I would recession certainly had seventeen months of job growth tepid.
August was flat.
And also the other thing I hear a key thing.
Is that in inverted bond yield curve where long term bonds are paying less to lock up your money over long term than short term right -- -- we don't have that.
Where -- if this recession come in from.
But I think we're we're rely on some objective indicators not subject of an object of -- those objectives.
Well they are but we've got the front end of the yield curve fixed down at zero and and -- manipulated by the Fed if you look at other economies where.
They don't have -- type of intervention pursuing yield -- been inverted since the spring.
The Indian yield curve has been inverted since the spring and so we -- rely on Economic Cycle Research Institute he's a common are frequent guest on your network and -- not too fond and when you look at their leading indicators and and they've never had.
A false positive mean that when they forecast recession they've been a 100% correct in the history of their Furman.
-- that.
Sense that it had about twenty years at least.
James and -- vessel until I bring in Susan into the conversation and Susan.
Obviously there was a lot of talk a couple of weeks ago but a potential eurobond let's go back to the European debt crisis for just a moment something similar to what.
TARP did for this country I'm curious now as you look back on what Europe's banks the treasury was -- or the Europeans are now what would you do with the European -- I think that in Europe needs to start stepping up and show some real leadership.
One of the biggest concerns is the European financials do they have a plan for the banks in case Greece does wind up in defaults.
And we haven't seen that yet from from the European leaders I think now that the German vote is -- maybe we can start moving that way.
You're seeing a lot of you know pop in the European financials today because the markets are starting to is looking for that may be expecting to see some.
And did you do have some -- and -- -- showing our viewers a few of the names but I -- and the particular talk about a couple of them and you do like Disney.
That is one of your -- -- curious about Disney because the stock has actually been James.
Under quite a bit -- pressure you're today the stock is down I believe about 17%.
And it's down 27% even just over the last six months.
Some -- -- talking about Disney why this pick and why now.
Well into the the market meltdown we came into the market meltdown -- team -- strategy in August well hedged and actually short emerging markets and that allowed us to be buyers into the weakness and one of the areas where there are tremendous lot of value there in the US market is in large blue chip.
High quality companies like Disney.
And what you have is absolute valuation mean that they're cheap on an absolute basis and -- I'm sorry.
We also like AT&T wanted to move on AT&T because we've had a lot of folks come on the show of analysts.
And say that they don't like the Telecom sector their underweighting Telecom.
Below and you know -- you like AT&T lot.
Well in a recession.
Assuming my premise is correct that we're entering recession.
You can.
Telecom tends to be more defensive sector you've got a dividend yield approaching 6% which in a low interest rate environment like we have.
Is compelling there their dividend yield is eclipsing by a large amount their twenty year bond yields so.
A much or why someone would -- twenty years eighteen T -- as opposed to their stock when you can get some dividend growth likely over over time.
So it's a more defensive equity position that people can have an -- in uncertain times.
All right James -- team asset strategy fund Jane thank you for a coming -- talking about European markets and also the text that was like that -- same spectrum.
