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-- back here to the US and your portfolio your money and what you should do.
As the Fed decides what to do hints at the Fed's meeting tomorrow about how -- the Central Bank will begin tapering.
It's 85 billion dollar bond purchasing program and what that means.
For the stock market and we're assuming you because you all up for a one -- and pension plan started out -- and that.
Legg Mason asset allocation chief strategist -- -- helped us prepare.
You've got nine billion in assets over it let me -- it.
Ed you're obviously doing something right with those assets so let's get right to it -- first what do you believe the federal -- -- more.
I think that the federal come out frank you'll come out knew he will be clear about -- communications and I think that they'll make the point that listen.
The the economic data that's coming out is.
-- is showing signs of growth.
And as a result there there's a healthy debate within the Fed given the unconventional monetary policy that we're employing.
-- to talk about went to it to -- to taper off the that the quantitative -- -- clearly they have.
To telegraphed some sort of message because this was never intended to last forever wasn't no it was not an and I think the key question is.
You know when do you taper off and and -- it you know the unintended consequences of easy monetary policy or unconventional monetary policy.
And that debate is happening right now in the in the Federal Reserve what do you think those unintended consequences -- do you think there's a bubble forming in any asset class at this point no because if you look at global growth and and the US growth is still -- and also if you look at the economic -- it's you know it's still spotty -- -- jobs -- are coming back but they're -- economic -- still -- either way up and Warren -- -- this when asked about what what happened when the -- finally did -- What will happen and he said all I know is every person will make a trade I don't know what direction but there will be a trailer that said.
You have to help our investors do what you think would help.
Teflon proof for at least put together some type of battle power for portfolio what are the three things the people should be do.
Well I think if you look at the three things first thing is given the the communication or miscommunication and the Fed recently.
Volatility has been reintroduced into the equity markets and that provides -- opportunity to.
To buy into equities which we think right now are still fairly valued or we're little concerned about earnings growth.
Tom given the tepid economic economic data but there's still provide good value you know the there's the second thing I think you think about is.
In that in the past two quantitative easing is when things ended and global growth and US growth was still subdued and inflation inflation expectations subdued.
But the ten year treasury rescue went down so what we're thinking about is you know for those that are adventurous amounted to take potentially tactical position.
As the as the long -- sort of move Bob one when you know when your sort of a little bit higher.
If you believe that there is no global growth to to kind of -- when -- along -- tenure law -- thirty you're gonna -- Democrat yet if you look at the tenure at any point did you tenure -- -- but.
But the whole point is right now.
There there is in growth expectation placed into the treasuries and also incorporates the the quantitative easing.
Main point is that the quantitative -- effects are from the stocks of quantity not the slow -- what's your favorite investment out here you say -- -- bonds as a buffer but.
What else would you violent why I really you know we we are overweight -- in our portfolios right now and that means getting hit though when -- -- -- started saying that it was a they did and the main reason my -- got it is they are.
Sort of bond like in nature that's so there are those who don't know we don't assume everybody knows it's real estate investment trusts -- exactly exactly.
But I think the reason we like it as we look at the relative valuations so reits are effectively cash flow in of red spent.
And -- the costs of they have does that go on the bar on the de lever up in the Markkanen by these properties.
So if you think about it and they they have the potential locked in at lower rates and as if you have inflation.
The view of the rents falling trees and the that the revenues inflation adjustments and there's a little bit of inflation protection and that.
-- -- put your money worry about this in your fund which is -- -- -- -- real return fund you've got names like Pacific office properties you've got American home mortgages iStar Financial -- It's done -- for -- over three years old are your underperforming.
Right here over here what do you think that is.
I think that you know if you have a fund that is you're geared towards inflation and and even though we try to buffer when there's disinflation.
When there is no inflation that that you you're gonna you're gonna lag and that's by design and so if you look at the the latest CPI they came out we're still.
There were below the 2%.
This -- fed target and so.
That's things a little puzzling to us -- is to see the market reaction when there's no growth -- threats always we look at a scenario where.
They're -- they start tapering QE.
And there's no growth there or very low growth and and you may see something that happen in the last two kiwis were.
You know Ibanez came down.
Good to see you thank you Wayne -- -- Legg Mason global asset allocation chief strategist.
We'll put all of those chips by the way on our FaceBook dot com slash was claiming page in case you missed some of them the closing bell.
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