Global Strategists Abandoning Bearish Views
By Michael Patterson and Inyoung HwangStrategists at the biggest banks are capitulating on their bearish forecasts after the best start to a year for global stocks since 1994 and gains of more than 7 percent in emerging-market currencies.
Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS AG (UBSN), raised his recommendations on global shares and high-yield bonds in a Jan. 23 note to customers entitled, “Wrong, but not too late.” Royal Bank of Scotland Group Plc (RBS), and Benoit Anne, the global head of emerging-markets strategy at Societe Generale (GLE) SA, said their estimates for developing nations were proven wrong.
Comment: The pessimism of the past couple of months was exaggerated. Now, optimism is getting out of control. Markets are becoming schizophrenic if they aren't in their traditional spin which is childish. Stock markets are on the rise by default which is not a sustainable path. The asset markets are driven by an avalanche of money. If one is willing to sleep with open eyes, one can get in, yet with the prviso to get out any time when the signal turns to storm again. Too bad for those people and institutions that depend on a sufficient stream of yield, who see their living standard wither away along with their accumulated wealth. Things are really bad for those who are too old to take new risks.