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Cantor Fitzgerald U.S. Market Strategist Marc Pado on the European debt crisis and its impact on the global economy and U.S. markets.
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A Euro plummeting on the ongoing European sovereign debt crisis gold breaking down as well as European banks rush to sell hard assets to shore up liquidity cash on hand.
Our first guest this -- wrote asking Paper called Euro trash.
Marked paid a US market strategist at Cantor Fitzgerald Marc welcome back.
Today -- so is this really now the beginning of the end for the Euro -- -- think happened to the currency.
While the uncertainty is really undermining the currency right now so as we get into the first quarter.
As the EU gets together tries to get a treaty that most of them can agree upon.
It might help the Euro but I think the days of of 140 for 2012 are over and that -- might see even the teens so.
Getting down to the 120 things don't go well.
So really a lot of people are are very uncertain about the ability of the EU to pull this off they'd are unwilling especially Germany to take -- Big steps in bailing out a lot of the -- sovereign so.
As they fight about it then that creates uncertainty -- that hurts the -- -- it cheaper -- great news for Americans have -- -- to vacation overseas that's for sure but it could spell trouble for US exporters right can we see -- impact on our markets because of this break out in the Euro.
That you might see a small impact on those companies that have a large.
Portion of their act of their business in the exports.
Especially to the European countries.
But other than that I think that if you look at the long term of the dollar.
From its high in 2000 of 127.
Down to its low in 2008.
Of 71.
Were bouncing back up around eighty.
That's not a lot of damage OK so.
We're still.
Gaining some some ground in terms of exports compared to the early two thousands.
I think will be able to sustain that stability is key that's really what exporters need stability of the wild swings don't help.
Do you think we're gonna see stability globally I mean if you look at Europe and the measures that have been taken.
So far I mean it's very concerning that the ECB said its balance sheet is as big as it's ever being.
Yet they're still not seeing peak demand for these these bond auctions.
And you -- soaring interest rates and even a part of the reason are rallying today is that some people showed up -- this Italian bond auction.
Again these rates are still very concerning and there's some talk a growing courts you well the possible credit -- in Europe.
In I think the market is pricing at the end here here is real issue is not.
So much the risks that exists we know about these risk.
And the market is pricing -- and if we look at the relative valuation in terms of earnings on the S&P 500.
We are trading.
Below the 2002.
Bear market below the 87 crash all the way back to eighty to 84.
Bear market Great Recession levels we priced in a recession on Europe having problems.
Third about a third of the S&P 500 companies actually have higher yields than the ten year treasury.
And they have upside potential say you have to look at this market as.
How much has it actually priced in these problems that we're talking about and I think it really has done quite a bit.
Dollar it's funny that we're talking about dollar -- where so far mark right away from it.
Classic strong dollar what is your outlook for the dollar and what it means overall for commodities obviously there's -- geo political story going on with Iran right now not -- huge impact on oil price right now but.
How do you think this all sorts out the new year.
But I think the first quarter is going to be difficult we're gonna get a little boost out of earnings help -- targeting.
99200.
Dollars per share -- for the S&P 500.
I don't think that's been adequately priced in the S&P should be at thirteen to thirteen fifty based on a trailing twelve.
After that we could probably pull back is to get a little more focused on the Euro again and -- -- as we get through the year.
We've got to remember very low -- in -- very low corporate debt obviously very low employment cost.
That means companies are well prepared to do better if the economy picks up at all.
There's a lot of cash on the sidelines companies are getting squeezed if investors say.
Hey look I want -- do something with that money or give it back to me if they give it back to -- in dividends -- buybacks.
Stock prices go up so our target for 2012 is 1450.
That's only thirteen point five times the low end of a 108 dollars in earnings for the S&P 500 that's a 16%.
Return.
On the S&P 52012.
So I think there's some real bargains out there yet equities the way to go marked paid -- thanks so much -- -- talk to you.
