Tags: Nomura | Stocks | Extremes | S&P

Nomura: Stocks Headed to Extremes, Good or Bad, in 2012

Wednesday, 07 Dec 2011 08:34 AM

The European debt crisis will finally implode in 2012 and take U.S. stocks down with it or, on the flip side, policy makers will avoid a crisis and stocks will climb, analysts at Nomura conclude.

Even if Europe does manage to save the eurozone, an economic slowdown fueled by ongoing austerity measures will drag on markets, although that, too, could bring stock prices down to attractive levels.

"Putting things bluntly, either we have another very serious credit event with consequences at least as severe as the Lehman Brothers bankruptcy, or stocks are probably a buy," Nomura's Global Equity Strategy team led by Ian Scot write in a note, targeting the S&P 500 broad stock index at 1,400 for next year, up from around 1,258 today.

Many investors are already pricing in cushions to account for surprises.

"Market valuations have moved to levels that, in our view, already partially discount a 'tail risk' event."

Slowdowns in the Chinese economy and ongoing political uncertainty in the United States could send stock prices down to levels ripe for buying as well.

Standard & Poor's has warned 15 eurozone countries they risk downgrades if they don't stop the crisis and take the necessary steps to strengthen the economy.

Some of those steps are politically painful, such as coordinating fiscal policies in a way that some states may have to give up some of their sovereignty when it comes to taxes and spending.

If European leadership agrees on such measures, S&P might not slap downgrades on the continent, says Jim O'Neill, the chairman of Goldman Sachs Asset Management.

"If they (EU leaders) come up with something along the lines they have been talking about, I doubt they (S&P) will go through with it," O'Neill says, according to Reuters.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
StreetTalk
The European debt crisis will finally implode in 2012 and take U.S. stocks down with it or, on the flip side, policy makers will avoid a crisis and stocks will climb, analysts at Nomura conclude. Even if Europe does manage to save the eurozone, an economic slowdown...
Nomura,Stocks,Extremes,S&P
293
2011-34-07
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved