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Geopolitical Affairs

Zach Abraham In US News & World Report: “It Might Be A Good Time To Explore European Equities”

By | Geopolitical Affairs, On TV, Stock Market

Fixed-income investors looking for yield are struggling in the near-zero interest rate environment in the United States. According to Zach Abraham and other financial industry experts interviewed in US News & World Report yesterday, there may be opportunities in European equities.

When considering European stocks that pay dividends, it’s important for fixed-income investors seeking an income stream to remember that many European companies pay out their dividends only twice a year, instead of quarterly as many American companies do. Also, the fluctuating exchange rates between countries can impact dividends for American investors.

To decide whether any dividend-paying stock is a good investment, it’s important to analyze the business and make sure it has a reasonable valuation. “For dividend-paying stocks, the best place to start is looking at a company’s balance sheet to see if the company can sustain the dividend,” says Zach Abraham, principal and chief investment officer at Bulwark Capital Management in Tacoma, Washington, just outside Seattle.

Zach says that when comparing European companies’ valuations versus those in America, here “we have record valuations, record corporate debt levels, yet you have valuations in the stock market that suggest to you that everything is humming along,” Zach says. In the U.S. in particular, corporate debt levels are rising, and Zach Abraham recommends looking at a company’s debt obligations when evaluating them. “The higher the debt on a company’s balance sheet, the more likely that company is to cut back or suspend that dividend,” he says.

He warns investors that there’s never been a period in America where stock market valuations have been this detached from the underlying economic fundamentals. “In the U.S., the Nasdaq is up in a year where we’ve sustained the biggest economic shock in our history.”

European markets have also been hit by the pandemic; however, Abraham says that “they’re far from trading at record high valuations. Due to the damage the valuation spread has done to the economy, European equity prices are attractive with more upside,” Zach says.

 

Read the whole story here:

https://money.usnews.com/investing/articles/investors-searching-for-yield-in-euro-stocks

The article also appeared on WTOP News.

Zach Abraham Featured by Business Insider

By | Geopolitical Affairs, Market Risk

Zach Abraham was one of the industry experts quoted in the recent Business Insider story, “The European Union’s $826 billion stimulus plan to battle the coronavirus is ‘too small and too late.’”

Zach Abraham told Business Insider that the EU fund is a mere “stop gap” plan of action.

“While the EU relief package will certainly help things in Europe, it appears to be more of a stop gap measure and pales in comparison to actions taken by the US government,” said Zach Abraham, chief investment officer at Bulwark Capital Management.

In its current structure, Abraham said, the EU cannot survive. What will likely happen is that Germany will back down on European Central Bank guidelines that restrict quantitative easing and other forms of monetary stimulus, and countries such as Italy and Spain will be forced to leave, he said.

Other comments from the article

While analysts at Bank of America believe the EU fund is a decent starting point to negotiations, they say it is “too small and too late” for urgent economic needs. Compared to the Franco-German proposal, Bank of America analysts called the EU’s latest recovery fund “tentative good news.”

Goldman Sachs analysts praised the plan as more “ambitious” than the Franco-German proposal valued at €500 billion. Analysts said that it was “close to the Franco-German proposal, but somewhat more ambitious on the loan-based mechanisms for investment.”

Read the whole article here:

https://www.businessinsider.com/what-eu-826-billion-covid-19-stimulus-package-means-2020-5

The story was also republished by MSN Spain and Libertatea, a top-tier publication in Romania:

https://www.msn.com/es-es/dinero/economia/el-plan-de-est%C3%ADmulo-de-750000-millones-de-euros-de-la-uni%C3%B3n-europea-contra-el-coronavirus-es-demasiado-peque%C3%B1o-y-llega-demasiado-tarde-dicen-los-analistas/ar-BB14Oh1r

https://www.libertatea.ro/stiri/ce-se-intampla-lume-era-covid-3019159

 

 

Zach Abraham Weighs in On the EU’s Historic Coronavirus Stimulus Package

By | Geopolitical Affairs, Investments, Stock Market

Zach Abraham’s comments on the historic European Union’s $826 billion coronavirus stimulus package (750-billion-euro) were recently featured on both Bezinga.com* and Yahoo! Finance.

 

The European Union is proposing a ($824 billion) coronavirus recovery plan to assist the bloc with its recovery. The funds, as well as targeted reinforcements to the long-term EU budget for 2021-2027, will bring the total financial firepower of the EU budget to 1.85 trillion euros, according to the European Commission.

EU Must Evolve To Survive, CIO Zach Abraham Says

“While the EU relief package will certainly help things in Europe, it appears to be more of a stop gap measure and pales in comparison to actions taken by the U.S. government,” said Zach Abraham, chief investment officer and principal at Bulwark Capital Management.

“Although we are keeping a watchful eye on all ECN and EU relief measures, we are far more focused on recent comments by Macron and Merkel that point to a willingness or at least an openness to a tighter fiscal union.”

In Abraham’s view, the EU cannot continue as it is structured today.

“Either Germany will have to relent on ECB guidelines which restrict the central bank from applying unilateral QE and other forms of monetary stimulus (currently the ECB can only apply monetary stimulus evenly across all member countries) or more countries, specifically Italy and Spain, will be forced to leave.” This issue is far more critical to the economic prospects of the EU as a whole, the professional investor said.

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Interestingly, Germany announced it was seeking a fresh $112 billion coronavirus stimulus package, just days after the EU launched its historic $826 billion plan: https://markets.businessinsider.com/news/stocks/germany-economy-112-billion-coronavirus-stimulus-rescue-plan-2020-6-1029271636

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You can read the original articles here:

https://finance.yahoo.com/news/european-union-sets-750-billion-192730975.html

https://www.benzinga.com/news/20/05/16115773/european-union-sets-out-750-billion-euro-coronavirus-recovery-plan

* With an estimated unique monthly visitor count of almost 1.5 million, Benzinga is a news and analysis service that focuses on global markets. It provides original, accurate and timely global financial content and features articles from industry experts and experienced analysts.