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Should You Invest in Europe Now?

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  • Description

    Cumberland Advisors CIO David Kotok weighs in on the European markets.

  • Duration 3:20
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Today interest rates at all time -- this investors looking for safety by buying these.

-- US government debt but also was born talked about running for the exits in the stock market and first up -- markets down today is that David -- Co-founder and chief investment officer Cumberland advisors to talk about this.

Market sell off -- even though we are off the lows after being down more than 200 David what do you make of the mindset with these say European headlines back at the forefront.

Well we have a series of dominoes falling Connelly -- we started with Greece and Portugal Cyprus little Cyprus Ireland.

Now it's Spain the next question is Italy the third largest debtor country in the world.

And so it's driving really a huge wedge.

The yields in Spain go up like junk bonds.

US and high grade sovereigns German Swiss go down we widen that spread it's getting worse it's every reflection.

Of the tension and fear in the markets.

It is and as you look at the Spanish debt next to David and -- next to me on the screen and you look at our own debt to see -- one point 4% yield on the ten year treasury note.

It's -- -- crazy we hit an all time low this morning was right at almost one for even what 142.

Right now but you some of these dominoes.

What bullet did what they actually fallen in everybody's been bailed out so far are propped up and what's gonna happen.

Does Greece and we should have already gotten rid of Greece or the European should have orbit and what's the next move an actual move -- day.

-- us -- it's a classic case of moral hazard defer the problem it gets worse subsidize it it gets worse.

Governments tend to do that United States does it to UK does -- the European governments they all do it.

It's the nature of politics so Greece which could have been a narrow loss is now going to be one in the hundreds of billions of Euro.

And the Germans seem to have said enough we're just not gonna put up any more money.

In Europe this sequence of Domino's is key.

Because they're seventeen players take one out.

Sixteen have to subsidize take another -- now it's 151413.

Spain is 12%.

And you've got to take it out.

So the numbers who are able to.

Firfer provides subsidy are shrinking the ones who -- it -- -- bad deal.

So that is a bad deal so how do you guys handle they are out there think look at all this and you just give it.

Very good analysis of it but -- -- have yet to make some decisions say hey we're gonna take.

Risk John Axel we're gonna try to find value and why I mean how are you doing that right now with such low yields and an uncertain obviously stock market.

Well we hold some cash reserves number one cash doesn't decline doesn't -- anything today but it doesn't go down so you need to catch reserve.

Because a buying opportunity is going to be ahead of -- we think secondly underweight Europe we are underweight the eurozone the only thing we own is a little bit in Germany.

And that's an underweight.

In New York there are some good stories Poland is one Sweden is one the UK could become 10.

That's interest thing we can talk about that going -- they have some work to do obviously but we will talk about that coming up so.

Stay away from Europe from now gets some gets in cash David Cole attack that -- -- take on -- thanks very much.

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