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David MacEwen, CIO of Fixed Income American Century Investments, on investing in today’s markets.
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Let's turn back to the markets now we are seeing a market sell off by a 183 points and joining us now for more on how to and -- day is American century's portfolio manager David.
The Q and he manages 39 billion dollars as CI as the CIO of fixed income not that earn -- before we talked about fixed income because this looks like a good -- to take one of those safety plays.
What's your read of today's market action we style -- little bit of poll of more of a pullback over the last hour happens -- wall of worry.
Start to build here on Wall Street today.
Well of course it all started with what's happening over in in Europe and and Spanish bond yields climbing up close to us 6%.
Italian bond yields up as well -- up about wanting.
So it's another day that just shows how much a global risk there -- global macro uncertainties and what that might mean to the overall economy so it's it's one of these days -- big risk off day.
After year where it's spreads have come in tremendously in this markets had a nice run.
And are in our mind this is the kind of correction that we would expect to see happen.
Given that the situation in Europe really hasn't been cured if just thrown billions of dollars out -- It's -- risk stock David David -- in -- of days often be at I often end up being a good buying opportunity as well you looking at the markets are you looking around possibly looking.
To scoop up seven -- is given a steep selloff that we're seeing.
Well I think -- venture that will will be the case but right now I think it's a case where you don't try to catch the falling knife.
It's once these trends get underway in the sentiment changes -- typically follow through for some period of time.
Not to be a matter days weeks or months we don't know exactly.
But but I wouldn't I would look to step in yet at this point.
In our portfolios are Americans Fisher investments we have been scaling back risk over the last couple of weeks.
And so we're looking for -- wider spread -- to return after this market.
David you know you talk about today but to your point.
Really for the last three weeks we've seen in the market -- -- invincibility.
Certainly has faded away and now.
It's starting to build very vulnerable starting the -- just like it did about a year ago the year before that.
Now I'm not sure what the drivers are going to be but a lot of people watching this show right now wondering.
What to be different about this spring and summer than we saw the last two years of people took -- pretty big hits.
Well does fill a bill like that could have a deja Vu all over again kind of moment don't we went through last year as well as the year before.
And a lot of the same things are driving clearly what's what's happening in Europe what's happening with the consumer here in the United States -- -- with businesses.
In our mind though the the overall economy is in better shape this year than it was this time last year.
The consumers picked up and clearly see an improvement.
In the employment market despite last Friday's that number.
Still have a better employment situation than we had a year ago.
And and so you've also had the central bank's just stepping up and really providing a floor.
To this market so.
So what we see this kind of what we describe for the pendulum of risk kind of going from overbought.
And now it's now it's coming back down.
And our mind there will be buying opportunities we're not looking for a double dip recession here we're looking for really does -- the same kind of growth -- -- We have GDP somewhere between one and 3%.
So not a double dip but not not a stronger -- very either.
Then -- I wanna jump in there because you know again now we saw good job number that I felt was -- a lot of professionals seem pretty Blase about it where one and a half percent first quarter GDP.
We saw consumer credit at least for credit cards down to months in a row.
And you know we're seeing more.
Bills like get consumers are certainly smarter than they've ever been before to pass.
Maybe they're too reluctant to carry this market without the Federal Reserve and that means can the Federal Reserve do more -- actually.
Doesn't have any more tricks up its lead.
They can do more permanent increase their their balance sheet to almost three trillion dollars.
And they can continue to buy more so if we have an awful hopeful pull back in the economy I think whom we will three is seeing QE3.
I don't think the Fed to really wants to do that but I think if we get to the point where they feel like they have to step in -- well will -- that they provide sentry afford to this market.
David Mayhew and now of American Century Investments thank you for weighing in on this sad and important day we're seeing the market sell off -- -- now more than a 190 points agree to have their input -- as well.
Thank you.
