SocGen: Decline In EPS Momentum ...

The quant equity strategy team at Societe Generale is out with a note today, and warns:

If history holds (and we see no reason for it not to) it will be interesting to see how equities cope with the expected down leg in EPS momentum. This is especially the case given that on a six-month view equities are now in positive territory and the sharp improvement seen in the US upgrades/downgrades ratio seen during the last couple of months. The strong outperformance of some lower quality cyclical stocks could also be called in question.

At the same time James Montier, the prominent strategist at Societe General, has listed seven habits of highly defective managers in a separate note:

1. They see themselves and their companies as dominating their environments, not simply responding to developments in those environments.
2. They identify so completely with the company that there is no clear boundary between their personal interests and corporate interests.
3. They seem to have all the answers, often dazzling people with the speed and decisiveness with which they can deal with challenging issues.
4. They make sure that everyone is 100 percent behind them, ruthlessly eliminating anyone who might undermine their efforts.
5. They are consummate company spokespeople, often devoting the largest portion of their efforts to managing and developing the company's image.
6. They treat intimidating and difficult obstacles as temporary impediments to be removed or overcome.
7. They never hesitate to return to the strategies and tactics that made them and their companies successful in the first place.

So watch out where the weakness resides!