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More Than $10B Pulled from Stocks

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  • Description

    Vanguard head of fixed income group Bob Auwaerter on where investors are putting their money.

  • Duration 3:34
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-- -- -- -- So people continue to bail out on the stock market listen -- this investors pulled out over ten billion dollars from US stock mutual funds in the past week.

A hundred billion dollars coming out so far this year with nearly three times that amount going into bond funds.

How dangerous is this Bob our -- and as -- At a fixed income and vanguard this man manages about 700 billion dollars Bob good to save.

-- -- good beer -- Bob if you look at all the classes of fixing com how dangerously overvalued are they now.

I think there's just a lot of complacency out there -- if you look at for example investment grade corporate dead.

The yield spreads of those vs treasuries are back to -- we saw 2007.

High yield.

The yield to maturity on that -- is near all time lows if you look at a lot of Muni.

Triple -- Munis or almost all time lows.

And even in that in the stock market if you look at volatility as measured by the vex.

That's it Fieger -- -- very surprising to make.

But complacency Maine is that people are not it -- does it not you can refute this if you want.

That they're not factoring in potential risk out there and so then my question as.

How dangerous are these asset classes at this point like what looks the best to you and what is your greatest concern.

Well a lot of more I want our so -- pretty much close price to perfection so -- assumes a decent in the -- economic environment going forward.

A good political environment.

And now my my concern is -- you just have a lot of issues coming up here you obviously got the presidential elections.

Coming up -- two parties that have diametrically.

Opposed views on how to fix fiscal problems.

Here you have the fiscal -- I think there's a good chance that congress will do nothing before.

The end of the year.

And -- -- the European Central Bank supposedly is put this new program in place.

To help out these troubled countries with third debt by -- in the -- -- secondary markets.

But when you look behind their announcement a lot of the details are are missing.

And then finally from my perspective -- agrees to start to rear its ugly head again.

And OK let's say what happens in Greece drops out of the Euro my concern is not about Greece's.

What do for example Spanish depositors thank boy are we gonna be next.

But is the government gonna turn around and give me the old style pesetas and on imitate a forty to 60% had.

In my savings so does that started the -- run on Spanish banks so there to things -- -- worried about -- just scared of the Jesus Saturday.

Quite frankly what's safe then.

What is say if what are what is safe you know right now.

Good to treasuries I think our welfare are fair value best -- Now I did sound boring to say but I would just say really diversified right now I want to be loading up on high -- -- were.

Or other credit classes like that that are run there there of course and it's it's not a real sexy -- through this and but unfortunately I think that's the type environment we're in right now.

And we'll take it Bob was great to see you thanks surveying hair on how busy you are you take yourself you come backs -- OK -- -- --

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