Call of the week: Forget the US, it's time to invest overseas

President Donald Trump’s latest round of political scandal is rattling Wall Street, worrying some investors that he’ll have trouble getting his business-friendly economic policies passed by Congress. The uncertainty surrounding President Trump sent the CBOE volatility index, which is known as the fear index, surging this week after hovering for weeks at its lowest levels in a decade.

It’s the political noise in Washington that’s prompting some hedge fund and portfolio managers to say domestic investments are too risky. In fact, they think it’s time to forget the US, and instead, look overseas for investment opportunity.

Troy Gayeski of SkyBridge Capital told Yahoo Finance’s Rick Newman this week at the SALT conference in Las Vegas that now’s the time to invest in Europe. Why? After years of struggling with stagnation and high unemployment, he says the region finally has ‘attractive growth, better inflation data, reasonable valuations and much better earnings prospects.’

Gayeski’s strategy of looking outside the US is in line with other investors’ calls. While speaking at the Sohn investment conference in New York earlier this month, well-known bond investor Jeffrey Gundlach suggested an interesting trade. He said to short the SPDR S&P 500 ETF (SPY) and go long iShares MSCI Emerging Markets ETF (EEM), because emerging markets are cheap compared to investment opportunities in the US.

More specifically, some think Asian assets could be a smart buy. Nader Naeimi of AMP Capital Investors told Bloomberg that there could be a ‘good buying opportunity in Asia,’ as strong earnings and an increase in trade help the region’s economy.

 

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