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Newedge Senior Director Larry McDonald on why the European debt crisis is allowing truth to slowly seep into the markets.
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Nicole thank you very much close down this European payments Farrelly gut then my next guest -- staring down the chaos and the anti austerity sentiments having across France and Greece.
-- -- is a buying opportunity for all of you Larry McDonald senior director with new edge joins me now boxes.
Yeah really the biggest threat -- you think coming over the pond from Europe right now for US.
Semester or else I talked about this in the book a colossal that common sense is Bob Lehman Brothers and essentially.
Lehman Brothers was -- -- China earthquake and now we're going to still for the aftershocks.
The market thirst for the truce -- he did you know wait in now it's going through that in Europe.
Bomb Spain said over the last several months that they didn't wanna do -- bank recapitalization.
They didn't wanna use public funds and now it turns out they're making a move.
For major bank there first -- third largest bank of Spain and this is the first time were saying this sort almost as a Lehman like Mubarak TARP in the sense what we're saying in the -- -- getting the truth slowly.
There needs to be bigger bank recap.
In Spain I think the it's mr.
market.
Vs the politicians you're seeing.
Bond yields go up as investors people sitting has -- home right now they wanted to how to play this.
You can see massive inflection points you just have to play the.
He had to know where those are also have to know where they are and you say that it's that there -- in European equities maybe even European financials that we should be looking -- we can -- ADRs.
If we're trading here in the United States.
You're saying hey go for -- the white or one point is the first well I'm always early.
Should -- the second call today -- hit don't buy today well -- you wanna start looking at the bottom line.
The United States stock market is up 90%.
From the Lehman lows OK more than Europe right okay.
So that's how much -- -- of Europe is massively under performing United States.
So if you look at Europe they're big companies there right now that have.
Say 5060%.
Of their sales outside of Europe and they're being painted with the same brush that's the first place -- look but the -- -- the day I think over the next year.
The next six months you can have a wash out there.
And that's when you want to really step in and and and buy equities from -- what.
The things that Europe though could be hit with unfortunately is is Greece you know leaving the euros so we talked about -- the Citigroup came out with a note.
Today and said that it's there's a high probability very high probability -- things to do the 60%.
The Greece is gonna leave the eurozone well that that's.
A clue as -- as the collapse of Greece unfortunately.
I would think that would be a market negative and I would and I wouldn't be entering into European equities about.
Well the market for so I think over the last year the market wants.
Closure in Europe and Greece especially yeah policies you're saying that -- be yet that would be definitely I think the market wants two things closure in Greece.
In the and a picture of the banking system in Spain.
But if you look increased.
The political system there most investors -- -- and if they had no idea that -- election.
Over the weekend with all these minority parties that don't have you more than 18% of the total vote.
So in order to get a government coalition you actually have to have.
Fifty of each one of these minority parties a chance to form the coalition.
OK and that's what's confusing people so at the end of the day you need government to talk to the ECB and the IMF -- that we don't have when we -- Okay you say that overall when it comes to Europe in particular that.
That if we buy into it on a dip you just told me that your that your early.
How early are you will -- -- didn't weaken I think changed a lot of our minds about what's happening in particular between France and Germany though the month of hold the cards if you -- -- -- absolutely from Germany especially.
We're this is been going on for two years increase and -- -- them to preserve the property market has been over you know.
In in really bad shape for a long period -- so we're probably in the seventh inning but it's gonna take because the politicians keep pushing things down the road they don't address things the way.
Hank Paulson if he put.
That'd be really hurt me and in the sense that Lehman's like go should be available but they've they put all the decision makers in the room and they did a big -- cannibalization in one weekend -- Paulson -- a fire pros.
And you're making a comment this morning that Spain is using a squirt -- so they need to go further if they need their Paulson that's what the market wants but.
With the -- diversification and political leadership in Europe.
That's for the markets not getting so that's -- you have to play the inflection point anybody -- -- -- here at TV and be negative after you know phenomenal trading opportunities in the next year.
Remember the government -- -- a deal to euros a trillion bucks to look to three months ago.
Didn't -- -- threat -- the market is gonna keep going up on euphoria and down and impatience over and over again.
Lam Mikey I liken a positive way -- you looking for deals were looking perhaps it does get limit don't think ten expiration of our right -- -- MacDonald director with new did you do wanna point out everybody.
To the dollar -- quick here has -- our -- and maybe this is his or I don't know note -- -- -- as a down 84 points Larry thank you very much for that.
