The corporate bonds aren't telling us things are as as good as the market has been,according to Adam Parker,PhD,Chief US Equity Strategist and Managing Director at Morgan Stanley.Our house call is that there won't be any QE3 by the Fed until after the November election.People are more aggressive because of the pain train higher thing.
The year end view is a framework.You have to be tactical with the low and volatile growth and extreme ten year Treasurys.I haven't found somebody who's bearish on earnings yet.Deflation is a real risk.At some point,you'll run out of band-aids.
If the revised estimates are right,the earnings expectations are too high.About half of US companies get margin expansion on average;the analysts are saying 86%.
What matters is the fiscal cliff.I am more worried than the market.You still have very close to no economic growth next year.People could be in a different mindset in three months than they are now,Dr.Parker pointed out.
Adam Parker got his doctorate in Statistics from Boston University.He was named to Institutional Investor's All-American Team in Portfolio Strategy and Quantitative Research in 2009 and 2010.
QE3 would be the Federal Reserve's third asset purchasing program to buck the market up.
Morgan Stanley(MS)
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