Tuesday, July 5, 2011

Equities: Big Banks Selling Treasuries, Commodities, Buying Stock.

The "Selling Tresuries, Commodities" bit is still just conjecture on my part.
Following up on "Equities: Hedge Funds Selling Treasuries, Commodities, Buying Stock.", here's FT Alphaville:

Sell in May and go away and come back on…
….. err Independence Day.
That seems to be the view at several big houses, which have either upgraded equities on Monday or urged their clients to buy in the wake of last weeks’ powerful rally.
Deutsche Bank:
We are upgrading our tactical view on equities to positive. On 4 March we turned tactically neutral from positive because of elevated consensus expectations for US GDP growth and rising geopolitical risks. Risks around oil have moderated, consensus growth expectations have been revised down sufficiently, and we are more bullish than consensus on the margin outlook. Consequently we upgrade our tactical view.
We expect the global economic recovery to regain traction in Q4. The weakness to date has been due partly to temporary factors such as the higher oil price and the tsunami that struck Japan. As the impact of these temporary factors fades, the continued improvement in new borrowing should sustain real GDP growth at rates above trend.
Today we are increasing our recommended weighting in continental European stocks to 26%, from a previously neutral 19%, and reducing our recommended weighing in US stocks to 40%, from a previously neutral 47%.
- The catalyst is the news that Europe’s public and private sectors have come together to avoid a near-term default in Greece.
- Although such a deal cannot solve the underlying problems, with a high probability of default already factored into Europe’s fixed income and equity markets, it should mean a continued rally in asset prices.