More confident on Europe compared to last year: Ketul Sakhpara, EQC Funds

In a chat with ET Now, Ketul Sakhpara, CFA, Director of Research, EQC Funds, talks about the macroeconomic situation in US markets and the Eurozone. Excerpts:

ET Now: The kind of US economic data we have got of late would suggest there are clearly chinks in the armour now.

Ketul Sakhpara: Yes, the jobs data that we got on Friday was disappointing. It was way below estimates. However, the continuing claims and initial jobless claims that we got couple of days before that, they were inline with estimates. The non-farm payrolls that we get, they tend to be very volatile. Even though that is a negative and that could affect the markets in the short term and by short term I mean the next 1 or 2 days, I would not think that is a cause of a major concern as of now till we get more data points to prove the theory.

ET Now: What about the European picture because it is not just the US data which is going to impact what is happening in Europe but you have also got failure in terms of a couple of bond auctions, in particular the Spanish as well as the Portuguese?

Ketul Sakhpara: Yes, Europe is an ongoing saga. We have been discussing Europe for the last more than 18 months now and as bond yields increase, that does cause concern among investors.

However looking at the longer term, there has been a phenomenal change in the attitude of the European Central Bank since Mr. Mario Draghi took over. He has been very proactive versus the previous central bank governor who was more reactive. He has come up with the long term LTRO operations. That is one big positive. The other things we have a much bigger firewall in place right now. It is a lot more systematic than what it used to be last year.

So now if the bond yields increase in Spain, we are lot less worried than last year because last year there was no clear path. This year we know there are multiple layers of support before we get into the chaos situation. So that adds a layer of confidence. In the short term, it might affect the markets a little bit but overall it might not lead to a big chaotic situation in Europe.