Following the lows in the January and February of the season, analysts at Citigroup told investors to handle for your inevitable rally and make preparations to advertise.
Now the bounce has happened – the S&P 500 expires nearly 6 % previously month – Citi says now you have for investors to tug the trigger.
“The pattern forming in global equity prices is ominous,” write Citi analysts led by Jeremy Hale inside a note to clients. “Price action more frequently tests the 52 week lows when compared with 52 week highs C similar to in 2000/1 and 2007/8.”
Some from the more bullish analysts recently reached describing the current market as similar to 2011 and 2012, when big selloffs were plus a level bigger rally .
But Hale along with the team the comparison doesn’t work. In those years, the U.S. Fed helped calm market volatility while using announcement of recent quantitative easing programs. It’s unlikely the Fed goes for additional QE this season, since the market is pricing inside a high probability that it’s going to hike its benchmark interest rate by 25 basis points inside the June meeting.
All of the means the “downward slope” seen in developed market stocks recently will likely continue.
“While there might be fewer ‘excesses’ now when compared with both other cycles, slowing growth (GDP and earnings) expectations in the context of ‘not cheap’ valuations are unwelcome,” write the Citi analysts.
