SAUT: 6 REASONS TO REMAIN BULLISH
Jeff Saut of Raymond James says the Super Bad Committee’s decision won’t make a dent in real spending in the coming year. He says the markets are overreacting to the news and that we should remain bullish for these 6 reasons (via Raymond James):
“The call for this week: Last Friday CNBC’s Maria Bartiromo asked me what was going to happen with this week’s Super Committee decision? After jokingly responding that if past is prelude if the Super Committee doesn’t arrive at a decision they will appoint a SuperDuper Committee, I then stated, “I don’t think the Super Committee will reach a consensus.” I also opined, “I believe there is a wink and a nod between President Obama and Speaker John Boehner to not implement the mandatory ‘cuts’ and let the 2012 Presidential election resolve the debate between increased taxes and spending cuts.” Quite frankly, I don’t know of any member of Congress that will stand for major military base closings in his (or her) state. Meanwhile, earnings continue to surprise with S&P 500 earnings up ~22% y/y, while revenues improved ~11.7% y/y. Such reports make it increasingly uncomfortable for the underinvested crowd; and the world remains profoundly underinvested in U.S. equities. Accordingly, I think stocks will continue to grind higher, provided we don’t talk ourselves into a recession. The reasons for that view are: 1) underinvested portfolio managers playing “catch up” (read: performance anxiety); 2) the upside seasonal bias; 3) low stock valuations; 4) improving economic trends; 5) still depressed sentiment readings; and 6) the knowledge that we have now entered the best performing six months of the year for stocks. Consistent with this view, I think the buying of inexpensive beta makes sense. “
Source: RJ
Clearly I’m not as smart as Mr. Saut, but aren’t #2 and #6 the same??
Yes. And don’t sell yourself short.
I’m guessing he may have been making a distinction between the 30-day timeline (holiday season) vs. the 180-day timeline (“Sell in May and go away”).
On another note, this Super Committee fail (and eventual retreat) is the most bullish thing I can imagine for the longer term – right, Cullen? And once again, the “experts” on Wall Street have got it all wrong. Should be a good buying opportunity after everyone is finished overreacting.
“Accordingly, I think stocks will continue to grind higher, provided we don’t talk ourselves into a recession.”
Talk about the ultimate in weasel words – this is analysis?
The markets will go higher unless we have a recession, now that’s an insight.
Normally he writes some pretty good stuff but this has the feeling of a “Macro Key” that you trot out when you have nothing new to say.
The six reasons (sorry, five), are quite shallow and frivolous appealing mainly to past observations sell side clowns pull out their sleeves during circus performance; not enough to scare the shorts.
I concur with Octavio and with CR’s algo saying “sell”. I disagree strongly with Jeff Saut. I’m holding only 3% in equities only because my policy is to never go to zero. Between the ongoing European disaster, which could become a Lehman-like event, and the slowdown in China/Asia due to their inflation fighting policies, equities are emphatically not a buy here. You shoulda sold in May and stayed away, and still stay away, IMHO.
U C, with all the new stuff that the “public” is now aware of (it is not just Greece, but Italy, Spain, Ireland, Portugal, France…) the foolish crowd has cornered itself into the roof of tower inferno with an SP500 at 1900 and nowhere to go but down given not only fundamentals, but sentiment, liquidity, technicals, etc. but the beat goes on bet you the TV talking heads are still telling you what a great buying opportunity this is for them to sell you their shares:-)
I too think that December is going to be unusually nasty.
1,2 and 6 are all assumptions that history will repeat itself – with the current Euro mess, I would not be using historical trends as my guiding light.
this is really lazy analysis! Sometimes Saut spouts nothing but sell-side nonsense. I can’t remember him being bearish for more than about a week before flipping!
People have gone very quiet on the “3rd year of the Presidential Cycle is never negative” too.
Here’s some reasons not to be cheery….
http://kelpie-capital.com/2011/10/18/recessionary-times-the-evidence-is-compelling/
http://kelpie-capital.com/2011/11/20/recessionary-times-update-and-eurozone-credit-meltdown/
Greatw ebsite you got there, bookmarked it!
If you were distracted you may have missed this. http://ca.news.yahoo.com/china-vice-premier-sees-chronic-global-recession-064121603.html If you were distracted you may have missed this. China’s economy one fourth the size of the US. Now a nice big Euro bail out. What could that mean to all assets classes?
Is a nice big Euro bailout even possible without significant and prolonged QE by the ECB? Unlikely if the Germans have anything to say about it.
See this: http://seekingalpha.com/article/309191-deflating-the-bullish-case-for-stocks
If China opens up fiscal spending by a large amount as that DannyB’s article hints, would that be a game changer?