Zook said the ‘too big to fail banks’ are going to survive because the have rebuilt their balance sheets and have enough capital but the problem is going to be on the regional banks because they do not have enough capital to support the losses they will endure.
As a result, Zook said he would "short" regional financials and real estate related securities and advised investors to look into the health care sector instead.
“The reality is, we’re beginning to see a softening of the tone out of Washington and we’re beginning to see things come through in legislation that’s not going to be as bad as people were expecting," he said. "So health insurers, some of the pharmaceuticals, some of the biotechnology is where we would be interested.”
In the meantime, Cox said he is bullish on the markets.
“Time will heal a lot of the problems, particularly in the commercial real estate,” he said. “The longer we can let the economy heal, the less the thesis for things going completely wrong again falls apart.”
Cox said investors can find real value in the market because of dividend opportunities.
“Asian companies never had good dividend policies,” he said. “[But] what we’re seeing right now, especially in the small and mid-cap space, companies really committing to a nice dividend policy. Which is expanding the universe of companies for us to invest in…We’re seeing consumer staples, consumer discretionary and industrial companies outside the S&P as an index to track dividend payers in Asia.”
No immediate information was available for Cox or Zook.
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