Monday, March 29, 2010

Equities Fall 80%+ Of Time 6 Months Post ECRI Peaks?

Although ECRI assures us there is no double dip in question ...
... Equities Fall 80%+ Of Time 6 Months Post ECRI Peaks?

To such conclusion came Teun Draaisma today, the admired European equity strategist at Morgan Stanley. In addition to the overall tactical caution he suggests following for European equity sectors:
OVERWEIGHTS: Consumer Staples, Healthcare, Energy, Materials;
UNDERWEIGHTS: Tech, Consumer Discretionary, Financials, Utilities.

Click on chart to enlarge, courtesy of Morgan Stanley.

Hmmm. Who ever thought?
UPDATE: Here you can get more of Draaisma ...


  1. Aren't you mistakenly equating the economy with the market?

    ECRI saying no double-dip in reference to the economy, right?

    Morgan Stanley talking about stocks, right?

  2. I thought I am not equating at all. I am sorry if I led you to such conclusion ... Both may be right and wrong.

    However, ECRI US WLI, I assume, contains stock market performance...

    I am rather amazed by the fact that people are "enjoying" cyclical recovery via stock prices. If you look at the last slide of the ECRI presentation, copy this link: , where Bullet 1 says: "structural gloom" ... which does not suggest, at least to me, bidding high valuation multiples. These multiples you can find here:

  3. Ok, understood. Yes I think WLI does have some stocks in it. Last slide of ECRI does suggest that high valuation multiples likely to be challenged. May be that near-term market support comes from just short-term cyclical "surprise" strength that comes under pressure soon.