Why US Stocks Trump European Bonds
While the U.S. economy is struggling now it will most likely rebound faster than Europe, making Wall Street a better place for global investors to park their cash than debt markets like the UK, France and Germany, analysts told CNBC Europe on Friday.
"In most areas of corporate bonds or government bonds you are not rewarded for the risks you take such as higher inflation," Christian Gattiger-Ericsson, global investment strategist at Julius Baer, told "Squawk Box Europe."
"The US is much more advanced in the slowdown and we expect it to be the first to come out," Gattiger-Ericsson added.
The European Central Bank left rates unchanged at 4 percent on Thursday and economists don't see a rate cut any time soon. In fact, some are saying that interest rates will actually have to be raised globally to combat price rises.
"Inflation I think in the end is going to be the tricky one. It's like the genie that comes out of the bottle, it comes out fast but it's very hard to put it back in," Bruno Verstraete, CEO of Nautilus Invest, told "Squawk Box Europe."
If investors want to go into bonds, the inflation-linked ones are the best, but they would do better to seek defensive stocks, Verstraete said.
"Water is a very good play against inflation and very defensive," he said. Other attractive sectors are those that don't have a lot of debt, such as the tech sector, drug retailing with drugs expected to be more in demand as populations age in developing countries, and large-cap biotech companies.
The classical defensive plays, food and commodities, are still attractive but Verstraete said he preferred the big companies that are more diverse.