Blog post
There are so many reasons to like them , fundamental expectations are too low , they look cheap compared to almost every other asset class and investors are not postioned for big upside. All the liquidity is in the U.S. equity markets. For me I would be inclined to generally buy things when there is a lot of fear. Our view on the 10 year note is that the yield will slowly drift slightly higher and the Fed will not act as much as people think on rates.Ulitimately you have to put your money somewhere, when you look the world and you have to take risk vs. reward . The main conversation I'M having with people if bond yields go higher. It is really hard to see things being attractive in the bond market. If you take a look around the world and U.S. equities have the best Risk vs. Reward. Yes, you will have volatile days that knock U.S. equities down , but buy quality U.S. equities on weakness. As an example, consumer staples such as cigarette companies and quality R.E.I.T's have corrected 10-12% in the last 4-6 weeks and represent a great entry point.The 4th Quarter playbook, we will break the market into 3-Area's Growth,Value, and neither using a Quantitative model. We like sector buys in the utilities and healthcare.I'M optimistic on U.S. STOCKS, I Especially like Biotech which is undervalued.Here are my 4-bullet points1) U.S. stocks heading higher2) 2016 year end S+P 500 Target - 22253) Potentially positive EPS - Growth upside Surprises4) we see a possible " Long Expansion"We like the U.S. because profits have kept up , along with supporative policy , quality, transparency,consistency of growth. We like the support that is there for the U.S.lastly, I think what your going to see is profits in the 3rd and 4th quarter really accelerate and companies are going to do better than people think. That is a good recipebfor an improving solid back drop Equity market. In addition, there is an earnings floor set on energy prices/based on the News that came out of opec. IT's a lot to digest,John C. Verducci 111