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Is this recent spate of lower yields a flight to quality?
We have Tunisia, Egypt, Bahrain, and Libya, and the possibility of a spike in oil. The fear trade, plus the concern about the economy slowing down as a result of higher oil prices, has driven people into Treasuries.
Are we reaching the point where the increase in gas prices wipes out the decrease in the payroll tax?
People say that the rise in gasoline is a tax on the consumer. I think driving is so integrated into the American culture that it may have some impact on spending, but probably not as much as people think.
Where do you see the opportunity in all this?
I'm very positive on emerging markets. I am positive on energy. I am very bullish on the U.S. market. I thought the S&P 500 could go to 1,500. Most estimates were 1,350 to 1,400, and it almost got to 1,350 before all this happened. The U.S. may prove to be the best performing of all the developed markets.
What is the most encouraging thing you see about the U.S.?
Even the Fed is revising its GDP estimate up from the low threes to the high threes. I think it will even be better than that. Earnings are coming through very favorably. And I think that with a positive economy, and the number of family formations, you are going to see an inflection point in housing starts.