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Morgan Stanley Chief Investment Strategist David Darst on why he sees opportunities for investors in Europe.
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Let's go back to shedding tears over Europe don't mr.
bullish on Europe this year or at least mr.
not as worried as the markets appear to be that -- he's David Darth Morton Stanley Smith Barney -- Strategist.
With the first on Fox Business to review what time you're here you should accurately what's going on somewhat surprise you standing here but.
That's when you see hundred.
Pulled off the Dow after after decent day is this something where you feel that it might Catholics of big concerns -- here.
Here's the question for you and your viewers -- is is this a two to 3% little tiny correction that's a healthy correction -- -- was 1298.
On Fridays we're very very low there's a complacency and the nonchalance there.
The American Association of Individual Investors latest survey 49% bulls only 24% -- -- -- the long term averages 39 to thirty so an over amount of bullishness.
-- up their basic story of Europe is financial conditions calming down.
They relax think the banking requirements Basel III.
And they basically -- eased off on the banks.
The bond yields have come way down the Greek bonds -- -- best performing asset class in the world last two were Greek market were up 88% of people today are focusing on Spanish and Italian bonds and -- flipping out because they -- What LP global -- has picked up that was another thing that was hurting Germany that you know and this is gonna turnout we think to be a mild recession so valuation.
Is very cheap in Europe things are picking up fundamentally in their markets emerging markets.
We think within Europe so that they get bond yields are calming down.
Mean -- look at a bar C other calm down days and days and days and then they've come up a little bit that had a little little bit but they're they're way off of last summer so we -- we're buyers of Europe where buyers of Japan and Europe and salty so we have not been worried about Europe however.
When I look at your S&P 500 target for 2013.
Which is what 1498.
It's very it's -- -- is where we are now David's or you're polar bear your equities you wanna have emerging market equities you wanna have large cap.
Growth equities look at some of your your energy stocks this year -- done about it for 14% markets -- 6% there up 14% you're drilling stocks.
You want to be in these sectors -- that have exposure to global growth.
You want to be in your health care sector.
So it's a sectoral emphasis you can the market we think the average will be lower.
But we think you've got emerging markets Japan Europe and your global -- Dole's aware -- be focused tell -- something people missed it.
They missed a year ago when you were standing here and saying you should be.
Comfortable with having a decent portion of your portfolio in equities.
Have they missed it in my overstating now.
Liz I don't like I don't I don't think they've I think you wanna watch any pull back and let let that pullback take place and then buy on any pullback basically -- four piece that you gotta watch lists are they off all production yeah.
Profits production.
Profits production.
Personal income and politics and that's the one thing that could throw things into welcome to the -- politics and our -- out embrace of the United States Liz okay the debt downgrade of the United States we've already seen it I will push you want this S&P already downgraded us a year ago August.
-- cares a year ago August the following Monday it happen at 515 on August the August the fifth 2011.
-- goal August.
August the eight the following Monday nineteen billion shares -- the average is three and half billion shares a day.
-- -- six times normal trading volume market was down seven and a half percent.
There was a lot of worry.
Well over this debt down IE but I tell you about -- I remember it well I picked up the phone call Warren Buffett called in to Fox News because they would have a lot programming we also did -- broken on fox business and Warren Buffett said.
I'm not worried.
That the treasuries of the United States you think we're gonna default on those and sure enough.
The reaction was people piled into the very thing that had gotten downgrade that was great -- -- lays.
Great point the yields then we're about two point eight there 2% at one point 97 they're actually lower people have been buying.
One of the things that gives a -- -- confidence about Europe is the Swiss franc and the German bonds which replaces for people to hide.
They've actually been selling off as people have been putting money back into the peripheral countries 96 billion euros.
Have flown in in the last two months into the peripheral countries and the German bonds.
And the Swiss franc are both down three to 5% from their peak so we say this.
Fear trade which Buffett highlighted.
Yet the US is not gonna default.
But the reason they downgrade this was political dysfunction balloting this and that is -- theme that we remain that this functionality deleveraging and deceleration he sold me as I said that's up.
