Last quote by Dubravko Lakos-Bujas
Dubravko Lakos-Bujas quotes
Similar to Low Vol (relative to Value), staples appears to be in a bubble (relative to Healthcare) after outperforming by 20 percent in the past year and it trades at a record valuation spread of more than 5x turns on PE NTM. We believe staples has become crowded during this cycle after a rotation triggered by the Fed turning more dovish, zero rates abroad, and stabilizing USD.
We believe stabilizing USD, rising oil prices, and low expectations going into this earnings season improve the odds of more companies beating on both top-line and margins compared to recent quarters.
We expected a Brexit outcome to have an asymmetric impact for equities, with downside exacerbated by unwind of long equity investor positioning. We see another 5-10 percent downside to the S&P 500 in the short term as likely, but we maintain our 2016 year-end price target at 2,000.
If we don't have that dollar support then it starts to get ugly. The reason why the market got excited over the last few months was the dovish Fed. But if the Fed now starts to hike that means the dollar will go higher and it will put renewed pressure on oil and the emerging markets.