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Meantime an economic gloom in Europe is adding to the political crisis over there now our next guest is here with two simple solutions.
Fiscal unity or departure from the monetary union altogether.
Fidel as security about Lou client advisor and he is joining us now we think happens.
Well I think when you look at the pigs countries in particular but there's no way that they can grow their way out right now there deficits.
Are running at higher rates each year you know in their growth rate their cost of interest on the government debt as they re issue it has also higher than the growth rates if you think about their private sector.
There's not going to be able to grow faster than I growing deficit and cost of money for the government so at the end of the day I think you're gonna have to see some countries leave.
-- hello it's funny because there's a hold a debate.
That's kind of centered around the French election now.
With Sarkozy looks like he may be in trouble and that's the austerity vs spending debate which is not suddenly come back and people -- -- this austerity is not working.
So well we should start spending whatever money we have somewhere again what I think.
Well or whatever money you don't have write my gotta come from somewhere for the NAFTA issue money in the debt markets and of course the question becomes at what interest rate.
But what interest rates and they issue that dead at the end of the day -- they can't spent is the it is your take on -- well I would just say at the end of the day the bond market will let them know whether or not they can spend.
Speaking about bond market investors have been very kind to the United States and our treasury market but would you add.
To up -- treasury position and it caused portfolio here would you dial it back given the the risk -- meet navy got the default risk is certainly the interest -- Sure sure and -- this will sound odd in -- of my views and and what's going on in Europe but yes.
Thirty year treasuries in particular the most interest rate sensitive fixed and composition you can have in your portfolio.
Alright great hedge against whatever equities should -- -- in your portfolio you've got to determine what mix is most appropriate for of course.
But they're about as adversely correlated to the -- market in their price movement is you can find of an asset out there so it's gotta be somewhat get a better yields and well and that's true so you can also look at high yield bonds you can look at corporate bonds -- look at emerging market bonds and places have better balance sheets and better real returns in our country interest rates could -- -- stocks could tank but -- and if we talk about that later -- thank you -- thank you to -- thank you very much appreciate it died in -- -- brewing.
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