Morgan Stanley

MSSB's David Darst: Recession in Europe Will Be Mild

MSSB's David Darst: Recession in Europe Will Be MildMorgan Stanley Smith Barney (MSSB) Chief Investment Strategist David Darst, spoke with FOX Business Network’s (FBN) Liz Claman about his optimism in the global markets. Darst said “the global growth has picked up” and that “this is going to turn out we think to be a mild recession.”

Video and excerpts below:

On why the United States lost its triple A credit rating:

“One of the things that gives us strengths, confidence about Europe is the Swiss Franc and the German bonds which were places for people to hide. They’ve actually been selling off as people have been putting money back into the peripheral countries. 96 billion Euros have flown in, in the last 2 months-into the peripheral countries. And the German bonds and the Swiss Franc both down to 3 to 5 percent from their peak.  So we see this fear trade, which Warren Buffet highlighted. The U.S. is not going to default, but the reason they downgraded us was political dysfunctionality.”


On whether Global growth has picked up:

“Global growth has picked up, that was another thing that was hurting Germany, you know and this is going to turn out we think to be a mild recession. So evaluation is very cheap in Europe, things are picking up fundamentally in their emerging markets – we think within Europe, so bond yields are calming down…They’ve come up a little bit. They’re way off of last summer, so we’re buyers of Europe, we’re buyers of Japan and Europe.”


On his S&P 500 (.INX) target of 1,498 for 2013:

“It’s below where it is right now… your equities, you want to have emerging market equities you want to have large cap growth equities – look at some of your energy stocks this year have done really well, they are up 14 percent – markets up 6 percent, they’re up  14 percent. Your drilling stocks, you want to be in these sectors that have exposure to global growth. You want to be in your health care sector, so it’s a secular emphasis – the market we think the average will be lower, but we think you have emerging markets, Japan, Europe and your global gorillas. Those are where we be focused.”


On whether people missed his advice by putting a deceit amount of money in equities:

“I think you want to watch any pull back and let that pull back take place and then buy on any pull back, basically your four p’s you got to watch… profits, production, personal income and politics and that’s the one thing that could throw things into the works.”


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