Goldman to Fidelity Call for Calm After Global Stock Wipeout – Bloomberg 02-04-14

Salient to Investors:

Catherine Yeung at Fidelity Investment Mgmt is advising calm, adding that profits are rising and shares just got a lot less expensive as being a contrarian and buying when things seem bad is often a good thing.

Goldman Sachs to AMP Capital Investors and JPMorgan Chase are advising clients to hang on.

Kathy Matsui at Goldman did not expect the US weakness, but sees no sufficient reason to change their fundamental earnings outlook and said the market remains attractive. Matsui’s 12-month forecast for the Topix is 1,450. The Topix is at 15 times earnings, close to its lowest valuation in 3 years.

21 strategists predict the S&P 500 will reach 1,956 in 2014.

Vladimir Tsuprov at TKB BNP Paribas said the optimism for Russia is long gone and the only surprise was how quickly the ruble had declined in January.

Nicola Marinelli at Sturgeon Capital said we have become addicted to having one decent month after another, but looking at 2011 and 2008, this correction is simply one of thousands – there is not a feeling of panic.

David Kelly at JPMorgan Funds said short-term forces in the US point to continued growth in all major categories of demand, while the long-term emerging market growth story remains intact Kelly said very low domestic interest rates for investors holding the vast majority of global financial assets should continue to pull money away from fixed income and towards equities.

Citicgoup said inflation-adjusted interest rates are still too low in developing nations to predict an end to the retreat in currencies.

Tim Schroeders at Pengana Capital said stock markets are vulnerable to a further correction that could surprise some people and sending the Nikkei 225 down as much as 25 percent from the peak.

Almost 200 stocks in the S&P 500 traded below their 200-day moving average yesterday, more than any time in 2013.

Investors are pulling money from emerging market ETFs at the fastest rate on record.

Losses among commodities have been less than equities. Bjarne Schieldrop at SEB said everyone and their grandmother have rolled into equities as they continued to get higher day by day, while there are not so many heading for the door in commodities when things look less optimistic.

The IMF predicts the global economy will grow 3.7 percent in 2014. Japan, Europe and the US are forecast to expand together for the first time since 2010.

The outlook for global earnings remains robust. Earnings for the MSCI All-Country World Index are forecast to increase 17 percent in 2014 and 11 percent in 2015 and 2016.

Nader Naeimi at AMP Capital Investors says people bailing now may regret it – the fear coming back into the market is good from a contrarian perspective and removes some froth from the market, reduces complacency and creates a buying opportunity.

Karim Bertoni at de Pury Pictet Turrettini said we are in a classic correction and should keep our calm as a 10 percent decline would not be surprising  and is something that happens a couple of times of year.

Read the full article at http://www.bloomberg.com/news/2014-02-04/goldman-to-fidelity-call-for-calm-after-global-stock-wipeout.html

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