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Opening OK let's bring of the market panel things we have Brian agenda growing -- -- problems -- a financial group.
And Chris constant -- he is from riverfront investment.
Gentlemen and Brian let me start with you first because the stock market.
It looks attractive right now based on that on our previous understanding of what forward earnings are but we have no idea what your earnings are going to be like in 2013 doing.
Consensus as a view on it there -- concern isn't so much earnings is the revenue side.
You one thing we have learned in 2012.
Is that the stock market can go up a lot can generate a 15% gain.
On the back oh vote reasonable earnings growth and even in the face of pretty slow pretty tepid GDP growth.
So it Smart people might perhaps say well if we've got slow GDP growth of the US let's look elsewhere that's where we bring in Chris.
A pretty fascinating reversal for you not necessarily reversal but -- change here you are in the past very bullish on the US you're now saying you know what I'm going to Europe and other areas why.
Well Tom -- maybe it's a little bit controversial and you look at the headlines and in Europe and Asia and and elsewhere in the world but.
Our thesis is really predicated primarily on on on what we call price matters which is an essentially.
So when you look at the US markets in our opinion US markets are still relatively attractively valued because there.
On our models about 20% below their long term return Trent.
And so the force of mean reversion can work in your favor -- but if you look at EAFE.
It's it's much much further below that long term trends you know somewhere between 35 and 40% below that long term trend which.
If history's any guide tends to correlate it's a very strong inflation adjusted returns for the.
Looking forward over the next decade so.
You know that's the long term view on places like Europe and Asia the shorter term view is that.
Don't fight the trend be where the crowded extremes and just like in the US for the Fed is clearly on for a spark -- side.
That's particularly true in the ECB which has been a huge change -- Bed that change in the ECB leadership from trichet to it to -- And him and the embracing of American style QE is a big reason why we went from starting 2012.
Very underweight Europe to now being overweight Europe.
I'm so don't fight the -- in your favor don't fight the trend and even on a day like today I find it fascinating that in a down day.
Date date Europe is beating the US.
And then be where the crowded extremes when you look at anything from fund flows -- -- how institutional investors.
Across the the globe were positioned us -- in our opinion or underweight places like Europe and certain parts all right what's our and it makes us from a bullish ones.
Actor that is definitely not fighting the Fed -- the financial sectors they've been benefiting quite nicely from all the money -- They have been getting a lot of heat of course from new regulations -- -- but they're sold well capitalized.
At the moment do you think that because they're so capitalized and set to grow.
That they are buy at these prices.
Will capitalize ever agree with if you look at the data many many financial firms are back to where they were before the financial crisis.
I'm also sure about the earnings part the earnings outlook for a lot of major firms still -- -- really great financial probably wind up being the best performing sector of the year.
So far but we're just not quite brave enough to go there yet.
-- Chris -- neutral down a little bit about fascinated with the overseas trade -- always -- but I really need a little bit more sparse -- concerned we wanna hear which sectors which countries specifically aside I mean I know you say Europe is controversial but which parts of at their southern there's -- -- Sure.
That that's a great question so -- now our biggest overweight is is in Germany.
And and the reason being.
-- is all of Europe is -- is cheap in different degrees.
But Germany you know we think when he set monetary policy for the -- -- which is clearly the periphery clearly the southern -- Europe the strong get stronger.
And I don't think anyone would disagree that economically speaking Germany's in the strongest position out of anyone in the Euro -- I'm also you don't do my bit my background as a bottoms up analyst.
For many years.
-- when I look.
Bottoms up of the German index what I find the art terrific companies that can compete globally and and frankly I don't find that everywhere in Europe.
But Germany seems to have a lot of when you look at the auto sector.
I you look at the -- health care sector I even some of the financials in Germany not so much maybe Deutsche Bank but the -- ounces of the world.
Not find world class companies world class management teams that it gives me extra confidence that Germany is positioned to really.
Do well even within Europe over you know.
Certainly -- as we gotta we gotta run but I got to ask you real quick.
Is apple screaming buy at these prices.
I think it is.
Obviously I'm in the minority recently -- six or eight weeks but.
I think investors -- it depends if you're a trader.
Who knows what's gonna happen between now and year end but if you're an investor takes an intermediate to longer term view.
I love the valuation of apple and I think that the argument that there innovation there is that is is is the -- unfounded Chris Constantin nose and Brian general thank you gentlemen we're gonna come back to Mark Sebastian when yesterday futures closed investor.