What’s this? A Barclays Capital analyst who is something other than ultra bullish?
Yep.
And it’s not just any BarCap analyst but the Head of Research — Larry Kantor.
In a foreword to BarCap’s latest Global Outlook (titled: Still in the sweet spot) he comes over all Rooseveltian, declaring the rally has nothing to fear but the rally itself.
In our view, the main risk to the current bull market in stocks and corporate bonds is not that the global economic recovery will falter. Rather, we believe that it is the strength of the recovery itself — or at least the recognition of it — that provides the greatest source of risk to the continuation of the market rally.
Once investors embrace that a “normal” recovery has arrived, they will quickly conclude that the current “crisis” settings for policy — such as nearzero interest rates — are no longer appropriate. That — along with the impending withdrawal from direct purchases of duration by central banks — will drive interest rates higher and make it much more difficult for stock and corporate bond prices to keep rising.
In other words, the good news that the patient has recovered will shift toward the more sobering news that the bill has come due. That recognition — which is likely to be fostered by still more positive surprises on the economic data front, especially in the US — will be the signal to reduce exposure, and it could well come before the end of the year.
That’s right Kantor reckons the end could come before the year end.
More in the usual place.
Related link:
Tim Bond reckons the real risk is on the upside – FT Alphaville