How to Put Your Money to Work in the Market

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Feb. 21 (Bloomberg) –- Barclays Head of Equity Strategy Barry Knapp discusses the U.S. markets and where he’s putting his money with Matt Miller and Julie Hyman on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Right now, are we?

We are not.

1839. 61 points away.

Before we move on to that, i think the point that adam was making is interesting, the details what will happen this year as opposed to what will work.

Corporate risk aversion was extremely high.

The average marginal dollar of free cash flow went to buy stock.

What you saw last year was that leveled off at the median company level and companies started to invest in inventory, then capital, labor.

Now you are seeing a pickup in mergers and acquisitions.

This, we think, is largely a function of public uncertainty and policy and some shocks like the japanese economy.

Companies are starting to put money to work in capital investing particularly -- the market is starting to reward for that.

Our strategy is to buy companies in the sweet spot for that, which is overweight in industrials and technology.

So you are buying him and a -- m&a anything?

From a corporate perspective -- the highest risk of thing, the potential career and there is if a m&a goes bad.

Are you giving preference to -- capital investment.

Capital investment.

The reason that we think that is such an important driver for this business cycle, with the exception of energy -- certainly technology was going through an investment bust.

That has changed because of things like equalization of labor costs across the world.

They have been rising in china, flat in the u.s. so, we had the cyclical recovery in capital spending delayed because of all this policy uncertainty.

That is really dovetailing nicely with the stronger secular trend.

The bottom line is, if a company is buying back his shares, that means managers can't think of anything better to do.

If the company is making a acquisitions -- we have already study after study after study.

Acquisitions do not make money.

It's just what managers like to do.

They are building their base.

Ultimately that will lead to -- not manufactured earnings, but true core organic earnings and revenues.

We will take a quick break.

You are going to stay with us

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