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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (13137)	2/19/2003 2:01:27 PM
From: stockman_scott	Respond to of 89467

Credit Suisse First Boston today on the market: [Looks like they agree it is not a bottom yet.] We feel that it is quite possible to get a 5% to 10% bounce in equities but we would struggle to upgrade equities (from a current position of 2% overweight) as: • i) There has only been partial capitulation with two out of our six capitulation indicators capitulating. Both Bullish Sentiment and now inflows into US aggressive growth funds are at buy signals. Typically, three out six indicators have been required to be at clear buy signals prior to a 20% bear market rally (and at the 24 July 2002 low, five of our indicators showed a buy signal). • ii) Corporations are still only marginal net-buyers of equities. • iii) We do not find the US market to offer obviously good value. • iv) There is huge economic uncertainty. • v) Iraq? We would put a 35% chance of our best-case scenario occurring (i.e., a quick and successful UN-backed war or a military coup within Iraq). • Investors might ask why we are very marginally overweight? We believe there is long term value in Europe and in Global Emerging Markets (GEM); two of our six capitulation indicators are at buy signals; on the whole, the behaviour of corporate credit spreads has been modestly encouraging-thus preventing a blow out in the warranted equity risk premium; there should be improved policy response (with the ECB cutting rates aggressively from perhaps 2Q2003, the Growth and Stability Pact being watered down and a new Bank of Japan Governor); US industrial data suggest scope for a mini-inventory build and finally, technically it is encouraging to see the high-beta sectors stabilize. • Our conclusion: there is no compelling case to be made for equities and the risks we have highlighted above suggests there might need to be.