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UBS Chief Investment Strategist Mike Ryan on the impact of an improving European economy and Fed policies on the U.S. economy and markets.
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With the Europe.
Markets up more than 4% year to date my next guest says while some investors are still on the sidelines were beginning to see.
A little more interest joining us now.
With his outlook for the markets and the economy of course chief investment.
Chief investment strategist for UBS wealth management Mike -- my good to have you here to be able.
A lot of fun in the European Union.
Let let let's start there.
We're not hearing so much about the the collapse of the EU.
David Cameron made.
May have some other ideas that but but the reality seems to be -- do things are winding down a bit over there are not influencing our markets nearly so.
March I think that's fair I think we're seeing -- in in the eurozone as well this could call an absence of malice but you think about we suffered through the last couple years it was a sort of existential crisis.
With the Euro survive put all the players still be intact.
I think a lot of those terrorists have been taken off the table by the posture of the European Central Bank obviously said okay we're gonna stand behind the sovereigns as part of the Euro -- And they've taken as real extreme events soft bell I think there's still some concerns going forward we're -- growth catalysts come from in the eurozone but I think the real extreme terrorist events of -- have been eliminated.
And and and implied or at least in direct -- backing up the banks in ways that weren't anticipated perhaps not to the level of others might have -- -- the -- is.
The European Central Bank has done a pretty good job not unlike what is beginning to be the assessment of the Fed here.
Answers because you you -- the banks and what -- Europe really is in thinking that.
It say it's a European sovereign debt crisis that feeds -- banking crisis that feeds -- European sovereign debt crisis.
Because since that the banks are so heavily exposed suited to the sovereign risks when the sovereign risks rise the banks become unstable.
When the banks become unstable put pressures on national governments to bail out and puts more pressure on sovereigns so the easiest way to -- -- is simply.
Take the sovereign risk away be the buyer of last resort for sovereign debt or be willing to do that.
And take some of the pressure off the banks that's one way to short circuit the crisis period now -- -- -- success well so far so good.
In this country the fan I mean we're we're Washington.
In you can smell of the the money in the air.
With this fed pumping like it has.
What's your sense of where the Fed is leading us what will be the influence on the bond market -- we're relate to equities.
I think there's really been a fundamental change -- when the Fed is -- policy.
Yeah we've we've looked at things in terms of they've given temporal time -- is that okay well.
Calendar years or we're measuring -- and six month periods or average amounts that they're willing to do certain Paulson is it taking that away and Amazon okay we'll do as much as we have to for as long as we have to.
And what they're really focusing on -- outcomes they're targeting unemployment rate I believe that there's targeting a higher level of inflation to make sure that we don't get this deflationary pressure building.
But the -- with the -- in the business of right now.
And that business what will be the influence on stock over the course this year.
You think you're gonna see money move is is we -- Bernanke would insist upon as a result of these policies.
-- moved from the bond market.
That's -- journalists and move the money from bonds.
-- -- equities and let's see you would lift here I I certainly think itself and look when you when you have a backdrop where the Fed is gonna provide a policy that is supportive policy backdrop.
Where they gonna keep interest rates low money market rates low and they gonna create a powerful incentive -- continue to move higher and higher.
Of the risk chain and clearly that's gonna benefit equities over the course this year.
An equities will be how much higher by the end of this year are always -- -- right now at 1543 S&P 500 -- we've already had a pretty big move look there's still some issues we only given me a few percent here but -- outlook you know -- was it look there's there's no reason why we couldn't breach that the target that's about where we think is 'cause central -- I think it's gonna depend a couple things of remember we -- the couple policy hurdles yet to clear we -- this issue in in Washington about.
-- silly things about -- love the way -- articulated that.
A lot of people discolored you know those fools out of Washington but -- -- the elegance to your expression and we appreciate should be thanks was going to be here -- -- Like right we appreciate it up next.
