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Goldman Sachs COO: I Think Housing is Back

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    Goldman Sachs COO Gary Cohn on the outlook for equities and the housing market.

  • Duration 3:04
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Cuyahoga community college in Cleveland dot -- claim and I'm here with Gary -- The president and chief operating officer of Goldman Sachs and and all right I've I have to get a whole bunch of sort of rapid fire questions -- -- number one housing.

It looks better Jamie Dimon of JPMorgan had told us in -- quote.

-- it's totally back in -- Jamie thousand totally back.

Duchardt that -- housing back.

And the good news about housing as we can outsource we need to build here in the United States and that's a great asset for our economy is there an investment play -- comes to -- I think there is.

You know there there're -- pulls -- capital out they're looking to buy houses looking to rent them out.

Looking to fix them up and I think there's really interesting opportunities in the returns segment for in the in the housing sector you could argue.

That the Fed keeping interest rates incredibly low finally put a bottom in the housing market stimulated -- enough.

That of course led to a fear trade where people piled into treasuries now carry out Arnold looks like there's a pile -- -- -- equities.

Even Goldman Sachs is portfolio strategy group came out last week and said.

Equities are looking a little hot at the moment -- -- you feel that too many people are Russian that the -- is turning and going into equities to quickly.

Was on the picture there's a pilot and equities.

The last four to six weeks we've clearly seen the momentum trade in the equities.

But if you roll back and look into December we had a momentum trade out of equities saw a lot of money come the equity market December before fiscal cliff.

Fear -- tax rises fear fear capital gains.

Some of that money is migrating back into the market it's migrating back in the market.

When people are feeling better about the economy so it feels like there's a bit of big trade going on but if you actually look at the dollar flows.

They're not as overwhelming as the market it feels like today.

But with so much money in treasuries for more than a year year and a half that makes you wonder when rates start to tighten.

Arabs you see that 2013 -- we'll start to tighten I don't think it's a 20:13.

Event but I am very concerned about rates tightening.

In the misunderstanding.

Between rates and bond prices.

Look at what some misunderstanding educate -- of the inverse correlation.

I think there's many people that have migrated into the fixed income world where buying fixed income because they think it's -- -- instrument.

They're redeemed at -- and it does it pays me coupon in the meantime what the fallacy is if interest rates go higher.

Those -- go down and priced in if people need liquidity before duration.

They will end up getting less than par back on the on their investment does that mean there's a bubble in bonds and -- fit.

Popped what would that look like surely you guys at Goldman have anticipated have model -- It's hard to model in a week what we can tell you for sure there's a lot of money is going into the -- from -- We've seen two or three years of almost record issuance -- -- or you.

It does worry me at the end of these cycles.

They take changing no windows to the bottom of the cycle like no one knows it's the top of the cycle we've been a 32 year bull market in bonds in the United States.

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