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Stephen Pope, Spotlight Ideas managing partner, on how the Eurozone will be impacted by the upcoming elections in France, and what this means for U.S....
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My next guest says that is going to be a long summer of discontent in Europe Stephen Pope managing partners my name is joins me now from London Stephen is great to have you back.
Look this is a major problem here is Sarkozy indeed does go and is not looking good for him right now we'll find out in two weeks.
What -- the due to the overall structure that has been created between the IMF between the ECB and the eurozone countries what does this mean now.
What I think any institution that's been lending to the distressed nations within years and has really set meeting on austerity that has to be implemented.
So that so we can find some progress in their production.
Now clearly if the French home may the sixth decide that they want to elect problems -- -- long does the president the socialist president.
You're going to see and he had drive away from this austerity measures they want to create growth this is going to put -- a great old -- is Angela Merkel in Germany.
Because the anyway there's gonna be money raised to -- some growth effort.
Is far these according Euro bonds for two Germans took he opposed right so I think we are going to see you post may sixth hello tension between -- the cool block.
-- -- -- -- OK we'll see even all the problems above their fair enough what does that mean though for US markets you evaluate both the in particular you've been taking a strong look at US treasuries -- at your analysis this morning you basically are saying.
This is gonna be good.
For US treasuries.
What certainly I think you'll find there's going to be this great flight to safety where is the and liquidity and where can you be certain that -- -- -- to return although capital and hope to some small return or new capital.
So what would certainly -- US treasury market as a key place to be.
Because we certainly know that that's gonna quit he trades on -- for a basis and the move cost -- going through.
Chairman -- still benefit because they also very liquid.
But really I think this is very much a play that.
Any international investor that does not need to have much more than coal positions exposed to Europe has no reason to do -- but I -- -- -- than that let us.
-- a lot of our viewers though are that they had they have a lot of them have been minimizing their exposure they've been looking to the US government.
As the at that -- lender of choice basically that is the treasury market in over the last five weeks we've seen yields go down in particular.
For the ten year or so my point is that -- looks like this is actually good for the US government we're selling more dads -- for the Americans bad for the Europeans.
Almost and it is very good for the US government because they're able to get -- debt -- -- away at you know very competitive rates they're not -- to see each auction.
Pushing the yields have a hard to get the money through.
And we know that there's been a lot of money going into the tips program because treasury inflation protected securities are actually giving quite a reasonable.
Positive return around 2.2 percent so far.
Where is -- nine treasuries don't give you that.
So there is a range of assets one and acquire if you're chasing US government debt but certainly I think who say US corporation -- to -- showing.
So -- profit growth.
Where is your school European corporations really because they have a core market that this is not growing functioning very well we have to raise a question talk about them.
-- corporate bonds US corporate bonds been against talk about that earlier Stephen Pope thank you Stephen.
