The Death of the Equity Culture ?

- "The recovery in equity indexes that started in March 2009 has stalled as many indices have gone sideways since late May 2010. The overall year-to-date performance is close to zero."
- "This hesitating pattern is a clear reflection of the ongoing uncertainties pertaining to the economic growth. The doubledip risk is clearly visible in the sharp retrenchment registered by our proprietary News Index."
- "One can clearly see that the correlation between this index and the S&P 500 has strengthened since 2008. A quick look at the VIX chart below shows that this relationship is clearly regime-dependant: in times of heightened uncertainty on growth, the stock market is much more correlated to VIX than economic data releases."
- "This regime-dependant pattern is due to last and may explain why traditional valuation tools may not be pertinent for short term investors."
- "Speaking of double dip risk may suggest that we remain in a cyclical perspective. The crisis may yet have had some long run implications (for equilibrium valuation notably)."

Natixis Special Report 181 20100913

No comments:

Post a Comment