Quality is likely to be a key attribute. Central bank ease then liquidity removal seem to be 18 month challenges. With equity risk premiums large and earnings discounts second only to 1929/32, we expect a classical late 2009 global equity market rotation with leadership first from the U.S. market followed, as global economic confidence develops in eighteen months, by incremental performance by emerging markets. Hopefully in pass through, energy cost decline with oil back at $39.7/Bbl wti should be substantial. Globally, we see recovery of the financials as crucial to capital market recovery, industrials and info tech as incrementally linked to fiscal largesse and healthcare as favored restructuring/turnaround sector. For thematic continuity, we have reproduced our note summaries of year end 2007 (Revenge of the Liquidities) and year end 2006 (In Search of Realism for 2007) with the full notes also on our website. Realism in attribution should help recognition of the next turn hopefully in advance of and certainly as it takes place.
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