Chuck Royce on Second Quarter 2010 and Outlook

Jul 28, 2010

Chuck Royce discusses the European debt crisis, the better-than expected earnings picture here at home, the state of the U.S. economy and the strength of the case for equities.

What is your take on the recent European sovereign debt crisis?

It's been worrisome on a lot of levels. There are very real concerns about the viability of the European Union, and these concerns have created a wave of anxiety that's hit the global markets hard. And the situation hasn't been helped by the fact that so many European nations are now angry with each other. So the crisis offers a genuine test for this loose confederation of countries: The EU is united only by a common currency and some common economic interests, and it can't establish tax policy or other fiscal measures for individual nations or the EU as a whole. Having said all that, I think it will survive, though probably with some important modifications to its current form. It seems to me that each country has more to lose by breaking it up than it does by enduring the current pains of hanging together. It's certainly in the best interests of the global economy that it stay together. Over the last several years, global investors have made it clear, for example, that they want a solid currency alternative to the U.S. dollar.

Have these events affected the way that Royce invests in non-U.S. securities?

Read the complete commentary

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