UBS preferring EM markets at these levels given the strong balance sheets of the em countries. Given the risk issues in the market the theme of ‘balanced’ cos with strong diversified earnings is coming forward again and again.
The pro risk trade is likely to continue to come off albeit we are still oversold at present on the medium term. Now’s not the time to be seeking aggressive growth. Small cap miners could be very vulnerable as an example for the next year or so given the anti risk issues. The UBS house view is that bounces are selling opportunities to mid 2012 and that the cyclical bull is dead for now albeit within a secular equities bull.
As an aside, I just watched a presentation from an analyst at Schroder’s he was mirroring the stance above aside from one sector.. Energy. The Schoder’s house view was that we have an energy problem. They were maintaining a bias towards energy services inc exploration siting the worsening fundamentals re energy demand supply imbalances.
The oil price continues to be hugely volatile, accepted but other issues like the crack seem not to be. The demand supply picture is worsening. The figures released a few days re Chinese oil demand nicely reconfirming the issue once again. http://www.bloomberg.com/apps/quote?ticker=CRK321M1:IND
It should come as no surprise to see WNR climb 25% in the last 2 days. But it wasn’t just wnr. All the major refiners in the US have added much weight. The underlying product they are selling is at record high prices. The slide in stock prices and concern on US debts etc seemed to have done precisely zero to the crack ratio. For disclosure i am long the refiners and added very recently. We must always see through the smoke and mirror of market panics to seize value when she presents. Given the crack at record highs and stocks at record over sold areas the signals were very clear. Rich
(2 votes, average: 4.50 out of 5)
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