News Brief from AXA Equitable: Highlights from recent notable market news reports
Oct. 14, 2011
The debate over whether the stock market was about to enter bear territory quieted a bit as the S&P 500 headed higher just shy of dipping below the closing level that would have fit the definition (“S&P 500 Rising 12% From Brink of Bear Market as 1,220 Approaches,” by Lu Wang and Nikolaj Gammeltoft, Oct. 13, 2011, Bloomberg).
“It wasn’t going to take much good news to drive the market higher,” David Spika of Westwood Holdings Group in Dallas told Bloomberg. “You had 30-year Treasuries yielding less than 3 percent, 10-year Treasuries yielding less than 2 percent, and stocks trading at 11 times earnings. You have to believe that at some point it’s not going to take much for investors to get back.”
The markets stepping back from the edge, however, didn’t stop Morgan Stanley Smith Barney from issuing a gloomy outlook on the economy (“Why Morgan Stanley Smith Barney has turned ‘decisively’ bearish,” Oct. 11, 2011, Investment News).
The publication cited the following statements from the most recent research bulletin of the firm’s Global Investment Committee:
“The risk of recession in the US and the rest of the developed world has grown significantly in recent weeks, so we are adopting an overweight position in safe havens and an underweight position in risk assets. This is the most significant change to our tactical asset allocation in more than two years, as we are decisively moving to bearish from bullish.
“The primary source of the recent financial market distress—with, we think, more to come—has been a combination of policy inaction and ineptness in the US and Europe.”
Not everyone agrees (“Economist says if double-dip hit, it has come and gone,” by Lavonne Kuykendall, Oct. 11, 2011, InvestmentNews).
“If we were going to have another recession, it would have been in the summer” amid the debt ceiling debate, the Greek debt crisis and the Japan earthquake, said Marci Rossell, former chief economist for CNBC, speaking at the IMCA Advanced Wealth Management Conference in Chicago, according to InvestmentNews.
She noted that while the unemployment rate remains high, it has been easing, adding that “Every component of [gross domestic production] has recovered except housing and we are growing at about 2%.”
IMPORTANT – AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.
