Capital Investment Biggest Problem in Europe: Singh

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July 25 (Bloomberg) -- Crossbridge Capital Head of Investments Manish Singh discusses monetary policy impacting worldwide markets and his subsequent investing strategy. He speaks with Guy Johnson on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

Ukraine, russia, iraq, syria, all kinds of difficult situations around the world.

We have got clearly a period of uncertainty coming up with the fed.

How we manage this transition, the beginning of the rate hike cycle, mixed data coming out of europe, yet stocks keep making fresh highs.

Draw a line between the two.

The s&p will probably finish at 1984 or something.

My find is that stocks have much to go.

The fed are thinking they need to tighten but they have not said they are going to tighten anymore.

If you see where the gdp growth is coming from, you have the pmi numbers yesterday which were very good.

You had the pmi number in china which was very good.

In europe, you have the ecb with the ltro and other options.

To me, the market is still very positive on equities.

What happens in the september fomc which i think would be more hawkish than the market is expecting, if you see the last two times, the market sold off after qe came to an end.

My concern will be around september-october.

That is not far away.

It is kind of tomorrow from an investment point of view.

This is tactical.

This is a big change coming up.

How much volatility are we going to see?

We had more than -- historic.

You have not seen this since 1995. it shows you how historically low volatility has been.

Let's look at it one by one.

U.k. gdp numbers at 9:30. it is probably going to be 0.6, 0.7. we get the u.s. gdp number next week and inflation number and nonfarm payrolls.

This is a very important week.

When we heard the yellen testimony in the senate, the feeling was that it is getting better.

If the data is getting better, then if there is any equity correction -- you would be happy to have a little bit of cash on the sidelines right now.

Put that money to work as the market dips on a little bit of uncertainty.

I will continue for at least a month and a half and use the opportunity to buy more.

When you look at the volatility story, when you try to get your head around the volatility story, central banks are clearly the major force in that.

How should i think about the relationship between central banks, volatility and the marketss over the nextd two or three years?

If you look at the bond markets, in the 1940's and 1950's the rates were very low.

The bond market didn't do very well.

We are in a loaded environment.

The money that has gone into the bond market over the last decade is going to find a new home.

This is where equity is going to see a flow coming in.

What you have seen in the last two years and equity markets is the first phase of the bull market rally.

Then you get the earnings.

I am glad you pointed that out.

If i look at the eps numbers and start to strip out the buybacks and everything else, the corporate growth story is not there yet.

A lot of money sitting on the balance sheet is not being invested into infrastructure, people, whatever they want to invest in.

When does it become real?

From an equity investor point of view, i am glad.

If you are doing buy back or making new investments, for me, the credit is not real yet.

If you look at europe, it is still sub 1% gdp growth.

From 2009 and 2013, the capital investment in the eurozone rose to 2.1% gdp.

That is a problem going forward.

Europe has much more to do.

You are clearly seeing a breakaway between the u.s. doing better, the u.k. doing well, emerging markets doing well, combined with china.

There is almost -- you have a very high stock yield in china.

They have other problems.

Do you think european equities are going to continue to underperform?

I am looking at the euro charts telling me that maybe the flow started.

Europe has disappointed for the first half.

I am expecting they will do better.

I do still think that europe has a disinflation problem.

I think inflation could get stuck at 1%. i am hopeful that they are going to help.

I am not going to play the ftse 100. something like ewus is what i like.

I am not going to pick winners in a small cap index.

For the same measure in emerging markets, we have been in emerging markets since the beginning of the year.

The trade has done very well.

Always nice to see you.

Thank you for your time.

Coming up, we are going to turn to the skies with three fatal airline crashes in one week.

This is shaping to be the worst year in almost a decade.

We are going to check on how the world's biggest carriers are reacting.

We are going to talk to air france.

Less our exclusive interview will be giving us more details about where that business is going.

It is going to be a fascinating conversation.

Lots of angles to pursue with the ceo of europe biggest carrier.


This text has been automatically generated. It may not be 100% accurate.


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