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That's well -- renewed concern about the euros in Citigroup's chief US equity strategist Tobias Levkovich has specific sectors and Europe is telling.
His client and basically our viewers to avoid -- by -- the CEO -- they're saying that we need to avoid certain sectors because in Europe what are banks.
-- three areas specific clear materials which in the US action is much more heavily chemicals -- -- metals and mining.
Autos we're at 27% of auto sales of US company -- -- sales are in Europe crack and then thirdly.
His in capital goods so industrial companies producing you know machines and -- that -- the like.
OK -- your for your GM those guys and -- don't do -- specific but look at those US auto -- and Emery about certificate.
Unit of variation comment about the six -- and the Vicks is getting it wrong and that we're following the -- we shouldn't be.
Because were betting wrong well as -- he meant by that group.
We don't -- -- that fixes the terrible indicator it's a coincident indicator.
Which is a real problem from our perspective it's not a lead indicator doesn't -- -- markets are going to go to -- where they are at any point in time.
That's not very helpful people called the fear gauge I don't think it is because only I really care about is how do I make money off any kind of shifts in the markets.
And we've we've created our own metric color panic euphoria model this kind of -- its bullish right now it's not telling us to buy or to sell.
Earlier this year kind of in late march timeframe was -- -- be worried it's getting higher up.
The people too complacent and last October November was deep in panic selling of very positive signal -- markets so we -- this is our gauge.
Okay what what -- investigating to tackle perspective today is the S&P were testing thirteen forty right now we're very club we're sitting on that right now.
Are you concerned -- that technical level gets broken through that we're gonna start seeing a further sell off.
I'm not a sufficient so I don't think than those contexts.
But it but I look at would certainly watching we're watching.
-- very mixed -- probably my biggest concern is in Europe my front probably my biggest concern is looking at the US and particularly the fiscal cliff -- year end.
If if they just didn't put in perspective we have a government right now that's very focused on elections and not focused on policy.
And because we don't know who's gonna win the election because we don't know composition of congress and neither do the members.
In Washington they're not moving to prevent this problem they're hoping they can pull together in lame duck I was in Washington last week.
And and really found people uncomfortable about what's going to happen here and -- -- businessmen in your thinking about our business woman -- thing about making investments.
In your company you need some sense of where tax rates are going to be we're government spending is going to be to make those investments already starting to -- companies are.
Probably scaling back some of their plans in the -- he has a move in to the summer and the fall.
Which by itself will also have an impact on the elections but but I think the earnings expectations of people -- year end and into next year are very very up in the air.
What is -- for the reasons that you cut diversified financials this morning you actually cut the sector down a notch from.
I guess what I initially read that called us -- -- -- I was JPMorgan maybe it's the regulatory environment O'Brien concerned about.
And they don't really reflect the three -- four different things and and we will weren't looking at what what was the news of the day on Friday we've made the decision actually on Wednesday of last week -- to make this change.
We -- watching what was happened earnings revision momentum so what are estimates doing on the street -- peaked.
About a week or two ago and started to roll over that's usually not a great sign for the stocks.
And in addition we think we're gonna pretty choppy market and they're very capital market sensitive.
So we -- outperform year to date they're up about 19% as of Thursday night last week.
Relative to the S&P up about 8% was -- OK let's let's take something off the table.
-- real quick consumer spending you always talk about it the higher and consumer being the -- driver of the numbers even though it's 70%.
GDP are you worried about -- consumer considering we've set about regulation and about mark.
I think the markets are the issues if if the market's pullback her continues comeback -- from the high of fourteen point two recently.
And that'll put -- some of the kibosh on that upper income groups of the top 20% of American.
Income earners account for 50% of US describe codes discretionary spending not all spending -- 40%.
Of all consumer spending.
And they also own 90% of the stock market so of their wealth starts to diminish -- they get a little bit worried and they start -- hope some of the spending.
Tobias Levkovich up from Citigroup great to have you on the show my smear his comeback anytime --
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