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S&P Capital IQ Managing Director Mike Thompson on why U.S. investors’ primary investments should be in the U.S.
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Asian investors wealthy Smart money investors know something that Americans are refusing to accept.
Or simply are too afraid to accept Mike Thompson S&P capital IQ managing director has been looking deeply into their investment patterns.
You're here at a Fox Business exclusive with what you have found.
What are they doing with their money.
Well Liz hikes those just over in Europe last week and I think -- American investors we get caught up in the that the business news cycle so much here and we start thinking about how we have somebody challenges is -- -- it is true we obviously could do a lot of things better.
And the situation be improved great deal.
But you know in the world of global capital flows.
Everything's relative.
And you know the good news is that in the perverse way and I I have to be careful I say this.
When there's dislocation outside the US could actually reinforces the -- -- flight to quality.
And the dollar starts picking up it's it's it's it's it's kind of favors and what's even better is that the US.
Of all of the really you know.
Most stable markets has the greatest liquidity and that is a premium to investors who right now in Europe.
Euro denominated investors are really adjusted in US denominated assets and they're going first into US treasuries right or corporates yeah -- don't yet know it's really interesting because what happened is.
First they went and they look for security in Euro denominated securities that they went right to Germany and he drove the German sovereign -- Germany's -- the highlight over there.
And one thing is not malfunctioning.
And they drove yields negative so then folks said well you know what you're Estonia -- against the dollar so what they want to do they want to own dollars and they buy dollars and they start moving into US treasuries actually this a consequence of this which is starts to to some of the pressure off the Fed because which you have this investor demand from overseas starting to come and do some of the work that they've been doing well.
The news that happened right before the show was that -- -- jumps one of -- independent rating agencies it has downgraded -- Germany so of course that debt would ceases to be as excited so they're coming here.
When they eventually going to corporates.
Which some of them already are not talking Asian and European investors moving into US assets.
What are they looking for and what should US investors be looking forward not necessarily to -- -- to -- capitalize on.
Right Willis to less -- by the investors first I mean I think the first thing that Europeans again again in the mindset is.
That they want the fixed income they want for -- -- they're gonna they're they're betting that the Euro is gonna continue to we TS -- and make some money that way.
But more importantly what they're gonna do is it to look for -- so they're gonna go into US corporates -- US corporate bonds or any great position.
Probably isn't fall are we down.
You I mean US corporation done exactly ops in terms of their fiscal situation US government they've actually.
They've actually improve their cash position they've benefited from a very powerful -- cycle.
And so what that means is that they basically can weather even -- almost 0% growth US economy.
But you're saying about -- just does something -- -- here non financial corporate fox yeah I -- in the financial see the problem is is we are still subject because the economic cycle to -- such -- stock and if the shock comes Tuesday come to the banking system because if Spain goes over a cliff.
It hits -- -- -- European banks -- you have to wonder what kind of exposures the American banks have the winner will eventually of this so called Smart Asian and European money go with the US equities.
You know I think that happens once you start driving down the yields I mean I think you can still get you know through a double B to single a something and half -- point -- 5% to go out enough time yield curve I think.
Then you can get that you can get a dividend of -- drill for example thanks 7% torso last I checked it keeps moving but you know there about Pfizer a lot of want Johnson & Johnson have a lot of yield -- some dividend opportunities.
I think so I think you should take a look at that best high dividend yielding stocks in the S&P 500 but more importantly I think what you have to do to seek a look the earnings growth cycle hope we don't contraception.
Mike Thompson is following the Smart money all the way from Asia and Europe across the -- here to the United States are -- the best thing going thank you so much.
Mike is S&P capital IQ what managing director and a friend of.
