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CREDIT SUISSE: 4 REASONS TO STAY BULLISH

2 August 2010 by Cullen Roche 4 Comments

Credit Suisse is still very bullish.  In a recent strategy note they highlighted 4 reasons not to let the bears get you down:

1) The outlook for corporate spending
Corporates are underinvested, with free cash-flow as a proportion of GDP at a record high of 4% of GDP and the investment share of GDP at a record low.

2) The outlook for employment
Our US employment model is consistent with jobs gains of about 100-125K per month in the US (equivalent to 1.2% growth in employment and roughly a 2% increase in consumption on an annual basis, assuming no change in the savings ratio and a slight increase in hours worked).

3) US housing affordability
Housing affordability in the US is high – and it is therefore hard to see a sharp downwards movement in US house prices (even though they may fall 5% in the second half of the year, according to our US homebuilding analyst Dan Oppenheim).

4) China should have a soft landing
We think China will have a soft landing, given that:
a) Inflation is abating

b) A fall in house prices is manageable

c) Long-term growth prospects are intact

Source: CS

Cullen Roche

Cullen Roche

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Comments
  • B Ferro

    Where was the bullet under China that explains the bullishness of a contracting/near contracting manufacturing PMI for the country and rapidly decelerating auto sales growth?

    08/02/2010 at 7:39 AM
    • Derfem

      Same for US growth during European crisis: “there is no impact on US growth which is still very strong, but the outlook is on the down side for European growth”.
      Result: US indicators in the red, European (lagging) growth in the green….

      08/02/2010 at 8:02 AM
  • 3421138532110

    LOL, besides #1, I now have 3 more reasons to be bearish.

    08/02/2010 at 9:58 AM
  • Ken

    #5 The only major reason to be bullish imho……Continued decline in USD……period.

    08/02/2010 at 4:31 PM