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Chris Harvey of Weeden & Co. explains why global risks may actually make stocks worth buying.
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-- -- -- All right the fiscal cliff meltdown in Europe's slowdown in China smackdown in Iran that -- macro picture is battered stocks all year long.
And now it's the best reason you should go buy stocks now so says Chris Harvey of -- capital he joins us now Chris give this your thesis here.
Okay for the whole year people been saying to us the macro macro we can invest it's difficult as we campaign that's what we're seeing now is the -- is not a good.
The macro has been weighing on equity prices that makes the risk reward very attractive -- that what's happening is CEOs have been looking at the macro and understanding.
They've been putting caps on Bauer should've been terming out that they kept margins high because they're not hiring and now we're looking at is very attractive were -- in the equity market.
We're having much lower systematic risks than we ever had.
And investors are now starting to realize the the investment is -- CEOs this stuff they're doing is bad for the economy not spending enough and expanding up against good for stocks in terms of the risk there that that's right.
If you're if you're unemployed if you're -- -- job this is back.
However if -- equity investor this is good because you have a great -- -- profile let's talk about fear you know the the lower the interest on a ten year treasury the higher the fear now look at these numbers that are producer Josh after but put together if you look at the star of the meltdown late 08.
And what the ten year treasury was vs a ten year treasury later and even now.
That the look at that three point 85% that means -- was relatively low even though is September 30 two weeks after Lehman meltdown today it's at less than one point 5% we're not -- systemic risk of collapse when we were back then.
And yet the interest rate is gonna even lower -- fear is even higher what's I think -- stop.
It's well I would say the fears higher what's happening is -- in Europe are coming down.
And that's putting pressure on the tenure so there is a lot of fear.
There is a lot of -- risk aversion however it's not the same as it was back in 2008 a good litmus test is if you look at JPMorgan JPMorgan couple weeks ago.
Reported.
A loss of if you look.
Few billion dollars.
334 years ago people were saying okay do they need money from the government is Warren -- have to -- and out.
That's not happening people look at saying that this is a good guy or perhaps this is good -- let's let's do we -- dot up on the fundamentals let's do deep dive in the earnings.
Is this a good guy and now that that tell you how -- we are from four years and now let's pivot from the macro which is usually the very risk makes it -- buying stocks let's go into another key factor in the in your article just housing is it finally starting to rebound we've got like three or four different data points coming -- right.
So a couple things that -- -- macro what's happened again.
Is the ten years at 15 year or below 150.
That's making -- rates on thirty year on the fifteen very very attractive.
In addition to that you had inventories start to improve a little bit yet tries to improve a little bit and it does look like housing is more than just to balance is something.
That has left finally and those numbers out how the home construction permits up and uplift from the -- since October 08 let's go with three ETF recommendations given that.
So there's a cup FAA airline FAA's airlines transportation.
There's also a wider transportation index which is I white -- And has also ITB.
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