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What is Driving the Market Rally?

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  • Description

    Skybridge Capital Partner Troy Gayeski on the outlook for stocks.

  • Duration 3:41
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Now.

I -- talk about it January effect the F Indy 500 closed above 15100 for the first time in five years and it's really haven't its best start of the year since 1997.

Where -- 97 cents and collect on the mountain what's got in the market -- multi -- -- -- they -- had a blast joining us now -- -- -- partner and senior portfolio manager -- -- average capital which is an alternative investment firm which basically -- Europe fund of funds -- so -- -- from.

OK so.

Other than the Fed pumping money in -- and a lot of -- what's keeping this market up.

The big driver so far has been that.

Resolution of a lot of the political risks right you've had a lot of investors nervous about fiscal cliff which hasn't been resolved with the cans and -- down the road.

And the tax hikes weren't as bad as many to a five.

The next worry of course was the debt ceiling which was -- be a big leverage point.

And Republicans kick back can now on the road it's all you really have left -- a sequester so there -- a lot of investors on the sidelines worried about political risk.

And a lot of the short term political risk has been removed but that you're saying -- -- -- kick it down -- it's gonna come back.

So we're took -- short term euphoria for awhile correct correct and it as you send your statement that the Fed's easy money policy has been a huge driver -- he is -- they're they're.

In the process of financial repression regime.

Where you look at different asset class like treasury bonds mean incredibly expensive.

You -- make any need cash affect you lose money after inflation rate right so what are your options and they're trying to drive people in the risk assets.

And as investors today locate high yield bonds or more certain types of mortgage backed securities they've become very rich.

And so only thing left is really equities -- it's almost a process of elimination for investors in of driving equities higher.

-- seen in this month of January rightly seen -- inflows -- into the markets.

Did they missed the run as it relates -- anything you can keep gone -- -- -- in January 1 to cut at least 55 net asset write if you buying now it's inspired -- -- right because you've had this amazing run -- 120%.

All the sentiment indicators are very complacent.

And institutional investors are bullish hedge funds are bullish should make you -- right of course of course that we would -- buyer beware -- just.

Understand it if we get a correction for whatever reason geopolitical risk maybe Europe flares up again.

The risk reward now on equities is certainly not as good now as it was so we would argue try to look for things that have less downside -- correction.

But still give you reasonable upside if things continue to go well -- issue.

Months you know the biggest worry for us right now -- a return of Europe to the forefront in the reason for that is Europe has a pervasive effect in the financial system and can -- further deleveraging.

And it's been almost eerily quiet despite the fact that the ECB's actually done nothing right.

And European banks -- we need to to lever.

They're in a recession so we could see over the ultra short term since markets are particularly ignoring that situation that flaring up again -- and I -- just talk about this I think to your point.

Our own political issues kind of took over -- I'm sure a lot of fat executive nor Eric there's no way Greece is fixed not not even close -- 300.

And a debt to GDP to 160% NASA that's like a solution.

And in the secondary worry of course as you would to a four has always been doing in the US can the can down the road.

Hoping that we can't grow it escape velocity 34%.

But imports if Washington -- -- pursuant programs policies it's very difficult to get three to 4% growth over and muddle along a buyer beware moderate -- he had I think you very much good to see guys I was in.

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