Analysts See Red

Despite the euphoria which earnings season can spark,many analysts see trouble around the bend.Bill Fleckenstein of Fleckenstein Capital says he is on red alert.Turmoil in the junk bond market may halt the buyout boom and hurt stocks.Richard Bove of Punk Ziegel is sure of his bearish scenario.The underwriting of both corporate bonds and mortgages has been very poor.This definitely trickles down to buyout bonds.With banks only willing to loan 60-70% of buyout costs,rather than 90% as formerly,deals will have to be pulled.They will slow to a trickle,and so will the boost they give to stocks.Phillip Roth of Miller Tabak sees a ragged,maturing trend in this cyclical bull market.A stock market decline will ultimately come because of higher interest rates.The tip-off will be an unexpected financial event.Zachary Oxman of Wisdom Tree Investments would avoid large equity allocations.He sees the subprime mortgage crisis peaking in late 2007-2008.Tech stalwarts such as IBM and Intel(INTC) are still worth considering,as are industrials such as Honeywell(HON) and General Electric(GE).Their global exposure makes them better prospects than companies strictly tied to U.S. consumption.