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Janney Chief Fixed Income Strategist Guy LeBas and First Asset Senior V.P. John Stephenson on the European debt crisis and its impact on the U.S. mark...
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The body's chief fixed income strategist at Janney and also looked pretty John Stephenson first asset senior VP.
And portfolio manager he'll Begin with you have -- look what there was of global scramble for safe assets today.
How long the -- those that half do we continue to see this for the next several sessions.
Well I think really -- seeing -- Monday's trading session was really the extension of grabbed for safety.
That began -- with the French elections of the beginning of last week of course -- The big catalysts that not a lot of folks are talking about over the weekend was a subtle shift in Germany with a relatively small local election.
Which put Angela Merkel party a little bit further from power.
-- fast forward to January 2013 when German federal elections are scheduled to come out.
And all of a sudden that situation is looking a little bit more Dicey Visa -- We'll I knew German government continues for the -- -- -- so I think that's really been the biggest catalyst of the course the last week that we haven't been paying quite enough attention.
Bring in John if we can and John you say there's little hope in fact no hope left for Europe has sold its debt crisis.
How does that play out we seem to be talking about Europe for years now Greece has been teetering on the abyss it seems like from day to day out to Allah.
Well how do you see this thing playing out -- what impact is that gonna have on the US markets.
It's gonna have a terrible impact on the US markets and markets around the world I think the reality is Greece is almost a virtual certainty -- vexing the eurozone and certainly.
Many European ministers are sort of water dropping that idea on on the investing public -- that's gonna happen.
Mean eventually if you had an uncle and he kept coming used to you and borrowing money and never had a job never paid back -- you finally cut him off to.
And that's exactly Germany's gonna do because they have to hold the line of Germany.
Spain bond yields are over 6% and that's unsustainable.
Yeah they've had taken three or four or attempts that have bailing out their banks are shoring up the situation but.
You know they're trying to kicked the -- the robust the foot it's getting awfully hard in the running out of -- so I think.
Ultimately what happens is they'll be some sort of exit from the eurozone for Greece.
And potentially others and that will that will set off a firestorm of markets and -- world -- sharply down about point.
Do you speak to our investor viewers who that they don't have any interest in panic came over a day like this nor should -- But they do have an interest in making sure they have a balanced and appropriate portfolio what should they add to it on the day like today knowing what you feel is going to come to pass.
Yeah absolutely we like -- putting a measure we call sort of risk protection hedges into the portfolio notably on the Treasury's side of the balance sheet.
So so what we actually like our tips inflation protected securities because that's really the only element of the treasury markets right now where you have some potential upside -- process is sort of a well what if US policy makers actually get things right what -- the Federal Reserve actually does personal growth cause some inflation.
Well -- wanna have a measure protection in the portfolio that responds positively to that event are well -- shares in the risk downside -- let me jump.
