Displaying items by tag: UBS
UBS just put out a very interesting warning to a large segment of the equity market. As part of their overall market outlook update, UBS explained their view on earnings and the direction of the S&P 500. There are two very notable points they made. Firstly, and most importantly, they reminded investors to stop fretting over valuations. In their words “While valuations are higher than average, we remind investors that valuations have no correlation with market returns over time horizons less than three years … And valuations typically don't contract meaningfully unless investors are concerned about a sharp growth slowdown or a policy error by central banks. And secondly, they think the S&P 500 will rise 11.5% by the end of 2022.
FINSUM: This is a brilliant reminder—equity valuations mean very little and are more a reflection of macro outlook than a concern in their own right.
Earnings are beginning to roll in for Q2 for many US companies. The expectations…see the full story on our partner Magnifi’s site.
ESG has been getting more and more mainstream, and yesterday it likely took the final hurdle to major acceptance...View the full story on our partner Magnifi’s site
Right now there is a big problem in earnings forecasts. UBS points out that many Wall Street analysts have been very slow to update their earnings estimates in the growing coronavirus lockdown. As such, the current spread between estimates and what actual earnings are likely to be is very wide. This often happens in crises, as analysts await more info and data before updating estimates, but it also generally means there is a much greater chance for volatility as earnings releases approach.
FINSUM: We expect that as Q1 earnings reporting approaches in the next few weeks, there will be some big attention-grabbing downward revisions, which could bring on additional bouts of downside-oriented volatility.
The world’s leader in managing the ultra-wealthy’s money says that the rich are bracing themselves for a big selloff in 2020. The firm’s clients hold near record level of capital in cash—25%—and think the stock market is going to have real trouble next year. The two major concerns occupying the minds of the ultra wealthy are the US-China trade war and the 2020 US presidential election. The bank got quantitative results on the topic from a recent survey, which received 3,400 responses.
FINSUM: Nobody knows how the market will do next year, and it is never hard to find people that are bearish. This looks like the perfect wall of worry for stocks to climb.