News Brief from AXA Equitable: Highlights from recent notable market news reports
Nov. 11, 2011
The odds of a U.S. recession over the next 12 months have declined to 1-in-4 from 1-in-3 in just two months, according to The Wall Street Journal’s latest survey of 52 economists (“Economists See Smaller Chance of U.S. Recession,” by Phil Izzo, Nov. 10, 2011, The Wall Street Journal).
Still, any optimism about the economic outlook appears to be guarded at best. Julia Coronado at BNP Paribas told The Journal that “the economy is still operating at only a modest pace and remains vulnerable to shocks.”
Referring to the ongoing European debt crisis, Paul Ballew of Nationwide told The Journal, “Italian default or debt restructuring would be Lehman on steroids,” referring to that investment bank’s bankruptcy in 2008 and the global financial crisis that followed. He said the European economy is probably already in recession.
One reason the U.S. might not follow Europe into recession is continued strength in sales (“S&P 500 Showing Record Sales Clashes With Slower Growth Rate,” by Inyoung Hwang, Nov. 7, 2011, Bloomberg). According to analysts’ estimates compiled by Bloomberg, the S&P 500 index companies are expected to post an 11 percent rise in revenue for 2011, which would be a record increase.
“Everybody thinks the world’s coming to an end, but corporate America is doing great and it’s a function of good sales,” Eric Green of Penn Capital Management told Bloomberg.
“An improvement in market sentiment with this combination of top-line sales growth will bode well for stock investors,” Chad Morganlander of Stifel Nicolaus & Co. told Bloomberg. “Sales growth is a bullish sign for equity markets to grind higher into year-end.”
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