What do we want (in a low growth environment with considerable macro risk)?!
– Better than market returns on equity and strong balance sheets with above average free cash flow yields! Read more
Fund managers have been shunning European bank and retail stocks for quite some time now, but there are signs that things are beginning to change. At least that’s what the global equity strategy team at HSBC found when they looked at the latest (March 2012) data on international fund holdings. Three European trends stood out.
Amazingly, European banks are coming back into favour. Well… more like slightly less out of favour (emphasis ours): Read more
… to explain Tuesday’s morning’s price action in European equities, which have moved higher in spite of rising Italian bond yields.
In keeping with the bearish mood this Monday morning, we present selected lowlights from the latest Graham Secker note.
Morgan Stanley’s European strategist has downgraded equities to “underweight” following the double-digit rally, to reflect the inadequate policy response to the Eurozone debt crisis, weakening economic growth, falling margins and some technical gubbins. Read more
FOMC minutes are out Tuesday afternoon and we’ll be at the ready for signals of an exit strategy for the Fed.
In a short note out in advance of their release, Morgan Stanley adds its name to those warning a “tightening moment” for equities (in this case European) will likely come way before a Fed rate hike. Read more
They are the ultimate consensus trade inside the ultimate consensus trade.
They are consumers in China. Read more
Traders continued to look to macroeconomic data for direction, as risky assets pulled back following Japan’s slower than expected growth, reports the FT. Japanese 10-year bonds fell to their lowest yield since 2003, while economists continued to worry about the implications of a rising yen. Asian shares touched three-month lows, though they regained ground towards the end of the session as investors prepared for a spate of inflation reports later this week from the US and Europe. The price of oil also turned higher, while the FTSE Eurofirst 300 index was up 0.1 per cent in early trade. Read more
Markets may have rebounded by 60 per cent since March, forecasts might look punchy, the consumer backdrop challenging and there’s the possibility of a dramatic bond market sell off and policy normalisation ahead. But in spite of all that, JP Morgan remains bullish on European equities.
The bank looking for further gains in 2010 and has set a year end target for the MSCI Europe index of 1,300. (Current level is 1085). Read more