"We've started the Santa Claus rally," says Jeff Saut, chief investment strategist at Raymond James. After the best week in the stock market in years, both in terms of price performance and economic reports, the burden of proof shouldn't be on Saut, but he tells us why the European crisis doesn't derail his bullish thesis in the attached video anyway.
Point one is a familiar theme with his actual hands-on evidence. "I was at a hedge fund dinner last night," says Saut, "and hedge funds are about 45% net long."
We've made the point about institutions' performance anxiety several times, but that's only because it's a very real factor. That being the case I'll say it again: Hedge funds are having their worst year since 2008. Fund managers can get away with losing money if stocks end the year lower, but they get fired if they lose money in a positive environment. Being less than half invested on the long side isn't a way to catch up to the market.
Saut adds that earnings look good, the recent data has taken a recession out of the picture, at least for the time being, and he thinks Europe is going to get fixed though it's likely to take years of work. Particularly now that American politicians are involved and making Germany look decisive by comparison.
"Europe has survived WWI and WWII, I they're going to survive this" says Saut.Read More »from European Action Is Good Enough for Now: Jeff Saut