Record Stock Run is Drawing Worriers

(Bloomberg) – S & P 500 is up 18% and beats its biggest first half since 1997. For Turks it is good. Will they get any better?

To a handful of cross-active strategists who were skeptical about stocks before this week's manic sessions, it becomes the most pressing issue. Increasingly, their answer is not likely.

However, the spectacular real-time reaction – nearly 90% of the S&P companies are in the green and investors just pushed the index to a record record that the Federal Reserve mayor Jerome Powell's poor pivot does not trust in the long term, says Sophie Huynh, a cross-active strategist at Societe Generale in London. They call more like a warning, she says, perhaps marking the beginning of the end of economic and market cycles that have been a decade.

"It's too late to be bullish," Huynh said. "The Fed is starting to consider price reductions, stocks should begin to reflect slower growth momentum, and investors should begin to reduce earnings expectations. But that hasn't affected stocks yet."

US. Stocks rose for a fourth day on Thursday, with S & P 500 increasing 1% to its first record since April. The Dow Jones Industrial Average stopped within 0.3% of its October height. Futures on the meters were down 0.2% and 0.1% respectively at 07:10. in New York. Speculation The Fed and other central banks are in the process of facilitating the global economy as a boon to financial products everywhere, while the 10-year US government bond falls below 2% for the first time since November 2016.

Huynh's arguments are not new. She says valuations are stretched while earnings are stagnating, a sign of "fear of missing out" has blind traders to worse fundamentals. Her team cut their recommended global stock split to 35% from 40% two weeks ago and said nothing that has happened since it has changed the view.

As with most stockholders, the relentless downturn in government bonds gives enough reason to light up stocks, pointing to the accumulation of financial weakness. And while Powell's boldness has been enough to revive the financial markets, expect monetary policy to do the same for the economy, asking too much.

"At this stage of the business cycle, you will either have a recession next year or a cyclical gap," she said. "If the Fed reduces rates, do you think we'll see a global growth recovery? That's not the case."

Much of the view is shared by Deutsche Bank Securities in New York. Dokyoung Lee, which helps manage about $ 1.5 billion in the company's multi-property portfolio in America, has trimmed its overweight position in global equities since April and became underweight stocks in May. He is now 5% underweight global stock while increasing his allotment to bond-like REITs and infrastructure stocks.

Nevertheless, Lee does not regret making the way-call just before the Fed decision sent everything higher.

"If you take a cold look at what's going on and ask yourself what has just changed, it's not much. You still have trade disputes with China and it's not going to be easy for stocks," Lee, head of multi-asset strategies in America at Deutsche Bank Securities, on New York's phone. "We have many of the same issues we had gone into yesterday. They won't turn around on a penny. "

There are those factors that will not go away even though Donald Trump and Chinese President Xi Jinping come closer to a trade deal at the G20 next week. Economic data in the United States is not the stars, an important production gauge is in contraction in most A stock market context comes in the form of small fund flows, as hedge funds trim stocks at the lowest level in five years.

Investors have drawn $ 152 billion from new and developed stock and listed funds this year, Bank of strategists said. America Corp in citing EPFR Global data. About one third of the money was taken from the US passive and active funds.

"It's not time to be greedy," Lee said. "Not at all." 19659015] (Updates with futures in fifth paragraph.)

To contact the reporter on this story: Elena Popina in New York at

To contact the editors responsible for this story: Jeremy Herron at, Chris Nagi

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