According to Morgan Stanley euro analyst Teun Draaisma, we've got just a little bit more rally left, and then a long, low multi-year grind as moneys starts to get tight.
The tightening phase may start in the next quarter or two, Draaisma observes.
“We believe investors need increasingly to consider the implications of monetary and fiscal stimulus withdrawal,” he says.
“We expect the first Fed rate hike in mid-2010, but the tightening turning point could come sooner, for instance through higher oil.”
“The Fed language change ahead of the first hike, or a market timing sell signal, would indicate the start of that next phase, for us.”
Draaisma says the start of tightening phases tends to lead to some indigestion and a defensive rotation in equity markets, for two quarters or more.
Retailing stocks and statistics suggest the U.S. stock market rally is for real, says portfolio manager Jon Markman, pointing to a study by analysts at ISI Group, which has done a weekly survey of retailers for two decades.
“They reported last Monday that over the prior two weeks, their retailer survey results have surged 15 percent,” Markman writes in Money Morning.
“U.S. retailers are even doing better than ISI’s surveys of Chinese sales.”
“We can’t know exactly how long the current advance will last, but just keep in mind it will almost certainly not end when everyone is still freaked out about unemployment, earnings and banks,” Markman says.
“The end will come amid sunny skies and smiles.”
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