You're watching...
Janney Chief Fixed Income Strategist Guy LeBas on the opportunities for investors in municipal bonds and for overseas bonds.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
While while volatility in the stock market may have you concerned about the health of your portfolio.
Our next guest sees big opportunity in fixed income markets -- -- is chief fixed income strategist at Janney but not necessarily.
Treasuries isn't fixed income -- waking not necessarily treasuries and any kind of look at the treasury markets as kind of the Bellwether if you will and you know and put up on the screens -- treasury yields are going.
But if you think about it realistically at 2% return for ten years isn't gonna help anyone meet their retirement goals it isn't gonna help -- -- -- I have why are they pouring.
I think we really see treasuries as what you might call an asset allocation play you know right now in the world their -- to assets there's risk and there's not rates.
And treasuries -- are pretty much all of that not risk category.
So when everything goes to heck and -- hand basket if you will treasuries of the one thing that I wanna go to the furthest.
Possible part in the world for for fixed income bet you're betting on Australian short term bonds more what we really.
Really like the continent of Australia because of its currency appreciation potential.
You know there are -- that's not already done that though has done a great deal but we really -- Australia in the long run as sort of the exporter of hard commodities to growing expanding Asian.
This is the trend it's playing out over decades how the kind of thing that goes away -- a couple of moment why short term -- long term Buffy take a look at the Australian yield curve it's actually inverted bomblets are meant exactly -- get a little bit of a higher return actually but staying.
Not too too long.
I also find it interesting that you're going for medium quality Muni bonds not even triple triple -- three rated.
As Muni bonds of this of course against the backdrop of Jefferson County Alabama going bankrupt right.
This is somewhat of an auspicious day to talk about Munis obviously with the largest municipal bankruptcy in history just having been declared this morning.
But the reality is the overwhelming number of the 50000 issuers in the municipal market right now are very strong.
And the credit here is as we've seen time and time again over the last twelve months -- really overbought so Meredith Whitney is wrong the banking thus far I'll say she's been quite wrong although we don't like to frame the debate in terms of her argument.
While we look at the chaos inside the beltway it is true that a lot of communities are taking their troubles seriously and really a tactic in going after them and cutting expenses exact unfortunate leads to a lot of layoffs of firemen and teachers etc.
but they are getting -- counts and order overwhelmingly -- doing the right things and if you look at state governments from for example Illinois last January.
-- into a very unpopular tax raise.
But based on the fiscal pressures facing the state it -- alone -- using bonds to raise revenue instead of raising tax rates which is a much smarter way to go and gives us opportunity uses investor and we see a lot of spending cuts many states actually have balanced budget amendments.
Which essentially requires them to cut spending in the event the -- hit its high yield corporates.
-- you'll find some opportunity there yet we would certainly do and we really look at the high yield sector right now particularly non financial corporations as as what I like to call lacked.
By the ugly stick.
Meaning that they've been impacted negatively by these big -- worldwide events that frankly.
-- Illinois based tool works company hypothetical firm.
Very little exposure to the events going on Europe get their bonds are spreads are prices have fallen they've widened.
And we don't really see that -- a long term problem would you avoid Europe at all costs at this point.
Analysts say at all costs -- we have another phrase though like he is is no such thing as bad bonds only bad prices.
About right now I'd say most of the prices are pretty bad but if we have a little bit a calm if we have maybe some intervention on the part of the ECB.
Or this EFSF -- actually gets rolling.
Then I think even in some of the shaky places like Italy in even in some of the shape -- -- Greece I suspect not Greece so much -- the challenge with Greece is they basically have an unsustainable debt -- there is no way around quite simplest and it came thank you cards our house view about -- Bob thank you live --
