S&P Equity Discusses Economic and Equity Outlook on Webinar

Jun 29, 2010, 13:39 ET from Standard & Poor's

NEW YORK, June 29 /PRNewswire/ -- The recovery from the economic recession is likely to be slow and uneven, and an even deeper and longer recession is possible if the financial markets lock up again, oil prices jump, or consumers remain scared, it was said today at a webinar for financial advisors and investors sponsored by Standard & Poor's Equity Research.  In addition to an economic forecast, S&P equity strategists provided their fundamental and technical analyses for the outlook for the equity markets.

"It is too soon to tell if this correction has run its course," said Sam Stovall, Chief Investment Strategist at Standard & Poor's.  "But when the pilot says 'Fasten your seatbelts, we are approaching turbulence,' travelers just don't grab their parachutes and bail out."  Stovall said the same holds true for equity markets today.  "We are in the traditionally weak period for stocks—the two middle quarters of a president's second year in office.  However, some investors forget that the three best quarters of the 16-quarter presidential cycle come immediately thereafter."  

Alec Young, S&P's International Equity Strategist, added, "We believe overseas equities offer good long-term value as recent declines have made valuations and yields more attractive.  However, trading should remain choppy in the near-term as European sovereign risk and Chinese growth fears have receded, but not disappeared."

Young said that S&P favors emerging market equities within the international space due to a stronger secular growth outlook and lower valuations.  As for the developed international asset class, Young favors Canada, Japan, and Germany.

S&P's Chief Technical Strategist Mark Arbeter feels a short to intermediate term bottom has been traced out by the major indices, so that there may be higher prices into the summer months.  "The longer term stock market is in question as the latest correction has caused a fair amount of technical damage.  Emerging markets have led global indices off their corrective lows, a bullish sign if it continues.  The U.S. Dollar is peaking from an intermediate-term perspective, but we think the dollar is tracing a long-term bottom.  Gold should continue to outperform the majority of assets and we could see some type of blowoff move later this year or in 2011."

"Whether the outlook is cloudy or clear, S&P recommends investors look to quality of past and projected earnings when selecting investment opportunities," concluded Stovall.

Similar complimentary webinars will be held on September 28th and December 15th of this year.  For further information, contact marc_eiger@standardandpoors.com.  

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