"Europe is a "train wreck" and on the "brink of a major financial crisis," Scott Minerd, CIO of the fixed-income firm Guggenheim Partners, told CNBC Tuesday.
The way Europe is operating right now, it's what I called recently 'cognitive dissonance,'" Minerd said, or "basically doing the same thing thinking they're going to get a different outcome."
"They keep throwing more and more liquidity at it thinking it's going to get better and it's not," he added. Europe fails to recognize that it has a "structural problem, not a liquidity problem."
People will "flee the euro" unless they find a way to bifurcate the euro in some way where strong countries are in the euro only and the weak countries are out, Minerd explained, adding, "To be honest with you, I don't see the mechanism to do that."
"As the capital is flooding out of Europe, which we're starting to see now, the first place it's going to go is to the safe havens—[U.S.] Treasurys, which [the market] perceives to be safe, and it'll chase gold," he added.
Compared to a 2 percent return on Treasury notes, investors will eventually say that "stocks with price-earnings multiples of 12 or 13 or 14 look relatively cheap, and the growth for corporate earnings in the United States is very good, and this is likely to help us," said Minerd.
The United States is "the least dirty shirt in the bag," Minerd concluded. "We have a very good chance of seeing equities up maybe another 10 percent [over the next six months] from where we are.' "
The great socialist paradise of the EU is breaking apart, investors are panicking and fleeing the oncoming deluge. And, there's not a lot of havens of refuge.
Think of Europe as the good ship, Titanic. Its beautiful, has grand lines, an ornate interior, and grand cuisine. Unfortunately, the bulkheads aren't sealed, the rivets are brittle, its missing half the required life boats, and the lookouts have no binoculars.
The grand ship has sprung a leak and is going down by the bow. There are only two rescue vessels in sight. A sturdy small freighter designed by the Swiss. Its in top shape and crewed by an experienced crew. Unfortunately, they can only take on a few passengers and is slow to take those on. The other ship is a large freighter designed and built in the US. She's of good design and was well built. Unfortunately, she's seen better days. She's got barnacles and rust and leaks. The engines still work and as does the bilge pump. The crew is sturdy and trained. Unfortunately, the captain is incompetent (there's a rumor he got his masters papers in Liberia). The first mate is a blithering idiot regularly sprouting inanities. The second and third mate can't do math,or their taxes. Wonder how they navigate.
Still the old tramp steamer is better than swimming in the North Atlantic.