måndag 24 januari 2011

Inspiration från Morgan Stanley

Minack på Morgan Stanley är inne på motsatt spår jämfört med mig. Han tänker sig först en rejäl uppgångsfas och sedan mer riskaversion och en set-back:

Minack, MS, i natt: However, markets remain fast, short-term and, in my view, not pre-emptive. The natural tendency will be for risk assets to rally, unless the risks are front-and-centre. Moreover, I continue to think that the macro newsflow will remain a good guide to DM equity performance.

…Developed Markets’ macro data continue to positively surprise. It has surprised more than Emerging Markets since late October

It’s also worth noting that the macro data are surprising more in Europe than the US (with Japan in-between). Our strategists see greater earnings gains this year in Europe and Japan than in the US. As I see it, the US-led December quarter rally was markets taking out the risk of a US recession in 2011; there is now greater upside in Europe and Japan if nothing goes wrong

I am not bullish for the year. Markets are fast and could price the plausible upside very quickly. More to the point, I do think earning forecasts are too high, and I think cycle risks will become more apparent in the second half. In short, this is a year where we may see the highs for developed equities in the first half, and end up with modest gains on a full-year basis.

John Mauldin (Out of the Box) fortsätter med sitt negativa endgame för USAs underskott. Jag ser fram emot boken ENDGAME (Mauldin) som ska komma i mars i år:

America, they assert, is in a fiscal trap due to the low interest rates we currently enjoy. What if I told you we could cut defense and discretionary spending by 20%, put in a two-year pay freeze on federal employees, and go ahead and let the Bush tax cuts on the “rich” expire. Wouldn’t that go a long way to fixing the deficit? The answer is, sadly, likely to be no.

As the table shows, if interest rates go back to their long-term historical average, spending could rise by $800 billion in just 8 years. Even under the more optimistic assumptions of the Congressional Budget Office, it is still $500+ billion. The government debt held by the public would be around 120% of GDP (back of my napkin), or close to what I said last week was completely unsustainable by the Irish. It will be no less so for the US.
If the US does not get its act together, we will soon be trying to avoid the windshield of the bond market, which will be coming at us faster than we can swerve to avoid it.

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