There is a lot of uncertainty in the financial markets right now, and a lot of hesitation, which can sometimes seem the same. Many analysts believe that markets will bounce back and forth for some time, fueled by headlines, not fundamentals, until some major issues are resolved: the US presidential election, A COVID-19 treatment , to name a few.
However, BCA Research’s third quarter outlook is a bit more determined.
The company, led by its chief global strategist, Peter Berezin, acknowledges the “nervous” tenor of trading patterns at the moment, but adds: “However, we would ‘buy the fall’ if global stocks fell from 5% to 10% from current levels While the pace of reopening will slow down, there is little appetite for the type of extreme blockade measures that were implemented in March. The United States Congress will eventually extend fiscal support to households and businesses. Around the world, fiscal and monetary policy will remain highly accommodative, which should provide a favorable backdrop for stocks. “
It’s worth noting that the BCA team has received at least one great call recently. In February, just like SPX shares,
Hitting a record high, the BCA warned that investors were probably too complacent about the possibility of a global pandemic.
Here’s a little more than what BCA is thinking for the third quarter and beyond.
• Coronavirus will continue to wreak havoc with the world, sometimes tragic, but “we are unlikely to see the kind of broad-based economic dislocations experienced in March” as masks and other preventive measures are adopted and because the medical community is better off equipped to handle flares, they say.
• The US Congress will extend the emergency benefits, despite some of the current heavy breaths over controlling public spending and the illogic of allowing people to earn more from unemployment than they earned at work. “Politically, the stimulus is still very popular,” analysts wrote. “Unlike the fall in housing, there has been little moral doubt about rescuing homes and businesses that ‘don’t deserve it.'”
• Despite an overall bullish outlook for higher-risk assets, there will be “considerable short-term dislocations, particularly for airlines, hotels, commercial real estate operators and developers, and lenders associated with these sectors” as the world stays low. And consider permanent changes to old ways of doing things, like business travel and office work.
• For all that, global stocks will be higher in 12 months from now, for many reasons: monetary stimulus, trillions of dollars of “margin cash,” and perhaps more bad news about the markets than many investors would believe. Berezin’s team wrote. .
How can these ideas be put into practice?
Stay overweight DJIA shares,
versus TMUBMUSD10Y bonds,
Over the next 12 months, BCA analysts suggest, with a weighting toward cyclical sectors on defensive and non-US actions on national teams. The DXY Dollar
it will continue to weaken, which will increase the prices of basic products. Also, look for both WTI CL00,
and BRN00 brent crude,
Prices will rise much higher than futures markets currently suggest: BCA forecast is priced between $ 60- $ 80 for both benchmarks in 2021.
Read below:Forget about the earnings season. What will the rest of 2020 be like?
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