Ã¢â‚¬Å“Dawson & Fielding IncÃ¢â‚¬- Market complacency is set to be replaced by fear as stimulus effect wears off.
Ã¢â‚¬Å“Dawson & Fielding IncÃ¢â‚¬ has apparently informed clients to exercise caution after warning that they would do well to remember that equity markets have become complacent. Analysts at the firm believe that there is significant evidence to suggest that stocks are still in the throes of a bear market rally.
The warning, made in the firmâ€˜s monthly email to clients, reasoned that it was Ã¢â‚¬Å“almost inevitableÃ¢â‚¬ global equity markets would retrace in the short-term given the lack of positive economic data emerging from developed economies.
A Ã¢â‚¬Å“Dawson & Fielding IncÃ¢â‚¬ analyst cited the VIX, which is trading at or close to recent lows, saying that this was an example of the complacent sentiment of investors who fail to lend sufficient gravitas to the fact that much of the rally has Ã¢â‚¬Å“wishful thinkingÃ¢â‚¬ and over-confidence in the ability of governmental stimulus to replace consumer spending as its driving force.
Ã¢â‚¬Å“Dawson & Fielding IncÃ¢â‚¬ admitted that it had expected the bear market rally to have corrected by now but added that markets would not be able to ignore the massive imbalances and debt issues afflicting the US and several European countries.
The analyst went on to say that, in the absence of a game-changer set of statistics like consecutive positive US non-farm payrolls data, it was likely that equities would retest the March 2009 lows.
He added that it was foolish for investors to believe that sustainable economic recovery in 1st world nations could be brought about without the active participation of the consumer.
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