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Don't think skies forget the fiscal cliff David -- chief investment strategist at Morgan Stanley one of the most respected chief investment strategist says.
There are three -- every investor needs to have on the radar.
But I don't care about -- about the fact that you recently changed your allocation you moved some of your money out of cash and bond funds in two watts.
We put money in the European stocks -- and we put some money into high cap high and high quality large cap US growth companies why Europe.
Europe one number one we think the valuations are an historic lows vs the US and vs their long term averages that's number one valuation number two.
We think the lot of the bad news is already priced in number three Greece seems to be another year they got -- back time -- the -- on the boat you just said earlier in the segment.
But -- -- doing the same thing.
So that the markets the Spanish bond yields of Portuguese bond yields the Irish bond deals the Greek bond yields last week it was up late on Friday there was a comment that.
Germany might allow Greece to buy back some of their debt sold those bonds went up -- call on May 31 revealed they -- fourteen eczema went down -- They're now 32 so they've over doubled the Greek bonds in price okay that yields have come down from thirty to fourteenth.
So where we're going with this is we think but that's I don't -- you're investing not anything -- -- -- -- that that the backdrop the backdrop seems to be making a bottom here okay.
It's secondly we think China which is a very important export market okay for group.
For Europe China is basically also making a bottom so we think Europe can make a bottom.
On based on fundamentals of China based on.
Calming down now.
The unemployment rate in Europe is still horrendous it's eleven point 6% its all time record that's inaccurate and indicate Spain -- slightly less direct more stimulus would have to -- -- forthcoming.
So these are the reasons why we like Europe and we would be going with some -- -- defensive type companies when I'm talking about is AstraZeneca.
AZ and is the symbol that's a big.
Drug company in the United Kingdom.
People are worried that they're going to run out of product we don't think so.
That thing yields.
North of 5% list nice -- six point 156 point 15% OK and -- -- -- just making a ton of content that there's there's and we think the dividends well protected secondly is GlaxoSmithKline.
GSK that's another UK drug companies so we're sticking with defensive type stocks within Europe.
And we are now downplaying the financials but would be in the Glaxo which is off its highs vs AstraZeneca which is right around -- I think you might wanna buy these stocks that it eased off a little bit of any any stock weakness that happens between now -- -- and then we would accumulate.
Now you also talk about global guerillas.
Global guerillas -- these companies with global footprints global brands they've been in business for a.
150 a 170 years companies like Procter & Gamble 175.
Years old we just celebrated their anniversary the other day.
You've got Heinz Ketchup you've got companies that have been in this in -- found in your pantry and in Europe.
On your medicine cabinet okay these are new dog.
The Coca-Cola the cultural policy what all of these names we like well our particular favorites are are -- -- Pepsi okay page until little -- all I cannot that's that's over -- I can't that I love it can't just freaking out right now.
Global guerillas are companies with -- global footprints list they have a globalized management globalized supply systems they have fortress like balance sheets lots of cash.
-- good dividends and have been increasing their dividends at the Diana west at Canadian European companies that are focused on the global and the global pressure to Europe which you feel was bottoming out well exposure to Europe is something as we think it's bottoming out.
Europe's in recession lives it is in recession you -- pointed this out it's in a recession.
However the global role for the the GDP of the globe is 65 trillion Europe -- a quarter of sixty entry in the united -- sixteen trillion.
So Europe and the United States are very intertwined but we think.
We think the US is doing better and that helps the European companies we tell people about the three piece you say profits production personal income.
I don't see fiscal cliff and -- you say this is what people need to look at when you talk about profits David you know we just came through the third quarter which was cut the worst in a couple years that we've see third quarter was the worst in three years -- is only up 110 of 1% when 97 -- 97% and the S&P 500 companies reporting.
But profits we think are at something that's got to be there for the market to have a sustained advance next year.
Our number as you know is for 1434.
Is at 1406.
We don't look for much -- -- -- and 1434 would be only gain of -- percent.
Class -- dividend another 2% so you don't have a 4% return from stocks.
And personal income that is jobs jobs jobs which is corporate CEO confidence which they lack right now because of all the regulatory -- David SARS.
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