Tim Seymour Bullish On Emerging Markets
What’s the best geographic location for your money? The “Fast Money” pros were split Monday.
“I think the biggest compelling reason for owning EM here is fund floats,” said EmergingMoney.com founder Tim Seymour, who added that emerging markets have rallied about 13 percent so far this year.
“You want to buy EM when fiscal policy is tight and monetary policy is loose. That’s what’s going on. Central banks in EM are easing — fiscal policy, though, very conservative,” he said. “It’s a good time to invest in this backdrop, but be careful. It’s been a big run.”
Morgan Stanley analyst Adam Parker released a report that ranked emerging markets above Europe, the United States and Japan due to higher net margins driving return on assets. The report also ranked the United States as the most expensive based on most valuation metrics.
Brian Kelly of Shelter Harbor Capital thought Europe, with the cheapest valuations, could be a value trap.
“The austerity measures that they have are going to put them into a deep recession,” he said. “Yeah, it might look cheap and it might look great on these metrics, but I’d be very careful of Europe.”
Kelly said one news item to watch was Germany’s report on industrial production, which was a leading indicator.
Joe Terranova of Virtus Investment Partners liked German equities, which he said were trading at 10 times forward earnings.
“That’s a 20 percent discount to here in the U.S.,” he said.
Germany, with an export-heavy economy, stood to gain from the continued decline of the euro, all while business confidence remained high, Terranova said.
“A lot of what ails Europe is actually working out to be very beneficial for Germany, and I think the German equities market is underpriced,” he said.
Guy Adami of Drakon Capital suggested playing emerging markets via domestic companies.
“IBM has been a great domestic play that has huge exposure overseas,” he said. “I think there’s still ways to play all those regions with stocks that are domiciled here in the United States.”
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Trader disclosure: On Feb. 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long GOOG; Terranova is long JOY; Terranova is long TRLG; Terranova is long AXP; Terranova is long MUB; Terranova is long LQD; Terranova is long SBUX; Terranova is long CNX; Terranova is long SU; Terranova is long OXY; Terranova is long MA; Terranova is long MCD; Terranova is long SNDK; Terranova is long EMC; Terranova is long IBM; Terranova is long VRTS; Seymour is long AAPL; Seymour is long BAC; Seymour is long INTC; Seymour is long YHOO; Adami owns C; Adami owns GS; Adami owns MSFT; Adami owns AGU; Adami owns NUE; Adami owns INTC; Adami owns BTU; Kelly is long TLT; Kelly is long SPY calls; Kelly is long SPY puts; Nations is long SPY; Nations is long BAC; Nations is long C
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