Not every analyst was swayed by the easy cheer so prevalent on the trading floors in recent days.The news out of Europe clearly is driving the market,said Jeremy Zirin,Chief Equity Strategist at UBS Financial Services.I think the market will continue to be driven by the news flow out of Europe.We're actually not that inexpensive.The rally that we've seen has really evaporated some of that cheapness.
I expect S&P 1100-1250 range-bound conditions.I think the risk-reward after the rally is to the downside.You want to have a more cautious disposition:staples,utilities,telcos,and tech with its high cash balances and emerging markets exposure.
The catalyst for a breakout would have to be a resolution in Europe and a resumption of strong U.S. growth.It seems unlikely given the uncertainty of our own fiscal policy-let alone Europe.The outlook is increasingly uncertain.Some multinationals are starting to see one of the problems is business uncertainty and market uncertainty.It's very difficult to make multi-year investments in capital goods or in labor when you can't be sure of the landscape.
On the surface,this earnings season looks similar to the past 6-8 quarters.What's really different is,forward-looking estimates are being cut at a dizzying rate.Below the surface,it's deteriorating,Mr.Zirin cogently observed.
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