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RBC Wealth Management CEO John Taft expresses his belief that Europe will be affecting market performance and volatility through 2013.
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All right so elections in Italy are raising investor fears that the country may abandon -- -- abandon its reform efforts on the Mario Monti and it's pulling down US stocks.
From session highs so what's next for the markets.
This might but we'll probably find out as -- in -- -- CEO of RBC wealth management.
John has -- up a wild ride just today I mean can you put this -- on its the F find hard to believe that.
Some.
You know some results from an Italian election that -- not very clear is doing this while markets.
No you can't put this all on the Italian elections but of course.
The whole issue of European zone's stability is one of the elephants in the room when it comes to.
How the markets are gonna perform going through 2013.
I think and what we've been telling our clients you're going to see in the near term over the course of the next several months.
Is a fair amount of volatility because as as you've pointed out on the show just this afternoon.
They're still is a lot of uncertainty in the marketplace.
Around the policy response to the US financial.
Crisis that we're looking at the long term structural deficit and it doesn't seem like policy makers are able to do anything constructive about that until they do.
You're going to see the market reacting to this rumor and that piece of a bit news and you're gonna see a chopper around that's what's happening today -- -- You know -- you say that what's been a plane while certainly in the last month -- -- may be the beginning of the year is the fear.
Of losing money is now being replaced with the fear of not making money.
So -- tell you clients let -- long term you say look across the valley.
Meaning you expect there to be some sort of correction.
But long term you see this market continuing to move higher.
Yes that's exactly right now let's not forget my firm manages money -- mostly individual investors.
And a lot of individual investors who were really.
Burned very dramatically so.
By the financial crisis and they've over allocated to what they think are safe investment stocks or bonds so now they've looked at a 13% run in 2012.
A 7% run so far in 2013 thinking -- -- Have I missed the -- should I jump bond.
I think though -- that kind of a move what you're gonna see is any any move like that gets followed by some kind of consolidation we see that.
And that's a great opportunity for individual investors.
To get back to their target allocations quarter target allocations what we think they're pretty neutral so what's neutral.
But 55%.
Stocks 35% bonds 10% cash -- you're not -- use some kind of market weakness which were likely to see in the near term.
To get there.
Have you seen a lot of your clients.
Say look -- getting out of these bonds are giving me nothing on one ability action on the market and -- -- you've been telling them.
Well I think the when the whole idea of a bond bubble and and exposure to rising interest rates is less compelling for individuals right now.
Then the idea that they don't have enough exposure to stocks so as I said earlier we need to get on that equity train.
If we're at the beginning of what could be sustained uptick in equities we need to catch it now as you said earlier why do we think that's a possibility.
When you look across the valley what's the valley the valley is this whole issue of policy uncertainty in Washington.
If we get any kind of a constructive response -- what are we looking at on the other side of the valley we're looking at housing that's bottoming in the US.
We're looking at energy prices that are coming down we're looking at banks that are starting to land.
We see European zone stability we've seen accommodative fed and central banks around the world and China has better more stimulative economic policy today.
Those are all positives for the market.
He said earlier 2% market growth in 2013.
And -- on the one hand that's not exciting on the other hand with that kind of growth underneath -- -- with some kind of policy response and -- -- responsible and long term.
You could see a very significant move up in the equity markets last half of this year and investors are afraid of missing -- -- we can it was a pig to.
Pig were when he took about Washington getting their act together but I -- is saying John Taft with.
RBC wealth management thank you so much you may need a good pair of binoculars to see all across the valley.
Well what's not happening in Washington that you know diversified portfolios basically what he's saying get exposure will be an asset classes -- -- money stock stock -- -- -- Yeah that's work.
Smart money is currently if you don't.
