Bull versus Super Bull
I was trying to find a case of bull versus bear, but the majority of the commentary has turned quite bullish so you’ll have to settle for one side of the debate this time. This segment brings you bull versus super bull. Here we have Dean Maki, Chief US Economic of Barclays and Tobias Levkovich, Chief US Equity Stratgist at Citigroup.
Maki’s outlook summarized:
- The US economy is stronger than most presume.
- Recent data shows no recession imminent.
- Corporate profits have slowed.
- Europe will resolve their issues, but problems remain.
- The Fed will NOT launch QE3 in September.
- Gasoline prices will challenge consumers in the coming months.
Levkovich’s outlook summarized:
- Expect “significant” stock market gains in the coming 6-12 months.
- The panic/euphoria model is still showing excessive pessimism.
- Don’t look at the VIX for market directionality.
Bull Dean Maki:
Super bull Tobias Levkovich:
Source: Bloomberg TV
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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7 Comments
“Europe will resolve their issues, but problems remain”
This is almost comical. What exactly will the “solution” be?
These guys are desperate to make a sale.
I’m almost starting to wonder if he’s right.
Drahi is a real central banker. He clearly lacks the power that Bernanke has, what with the Germans and all, but the man has teeth and bite.
This is key – Trichet lacked both.
I’m wondering if a big part of the crisis over the past few years in Europe is the direct result of Trichet being such a supine and weak ECB leader.
Clearly the biggest issue is the fallibility of the Euro concept in general and this needs to be fixed long-term.
That said, the tail risks from that reality over the past few years could have been in large part because the ECB lacked the leadership to prevent them.
In other words, is the market under-estimating Draghi’s “Bernanke-like” qualities of leadership?
Does Draghi’s leadership eliminate tail risks to the situation which thereby gives the EU time to put together the long-term fixes they need??
“Does Draghi’s leadership eliminate tail risks? No. He may temporarily reduce tail risks and postpone them for a while, but no way can the ECB eliminate these risks. How long will the Germans stand by and allow the ECB to expand its balance sheet by another 2 to 3 Trillion without progress on fiscal union and moves toward a united states of Europe?
“Clearly the biggest issue is the fallibility of the Euro concept in general”
Not sure I agree with that. The crisis was not caused by lack of confidence in the Euro, and I don’t think a more inspiring central banker will solve the problems… too much debt, too high deficits, lack of competitiveness, unemployment, popped housing bubbles, etc. If Bernanke can’t fix 8% unemployment, how is Draghi going to fix 25% unemployment?
Burned but Bullish at Citigroup
“Mr. Levkovich has the distinction of being among the most prominent bulls on Wall Street. His forecast calls for the Standard & Poor’s 500-stock index to reach 1,675 by the end of 2008″
January 20, 2008
http://www.nytimes.com/2008/01/20/business/20maker.html
Fairly clear to us that we are in a slowdown as noted in the business cycle phase diagram below. Generally, history suggests the US economy has 50/50 chance from this stage of going into contraction or expansion – so the general bullishness seems misguided to us. That’s not to say equities won’t rally – but low volumes, high hedge fund beta and overweight futures spec positions aren’t flashing green for us.
http://www.adsanalytics.com/report.php?report=s-bcp
In 1931 no one thought the US would go off of the gold standard. Fast forward to the present and there appears to be a similar dynamic at work. What will happen? I sure don’t know. But it does seem the potential downside risk, while less probable, is far greater than the upside.