Shares and Stocks face reality
Posted on January 14, 2010 by Shay Greenberg for Luckyroom.com
Speaking to Reuters analysts both Societe Generale and HSBC estimate that the ‘return’ to investors is the harsh reality of the fragile recovery. Anemic profits will be accompanied by at least temporary pressure on shares; Investors have come faced with analysts and regulators, warning of weak-at best-race recovery and excessive price to the assets at risk. Them who believed that they can at least get backups in corporate earnings and from there will take a disappointing outset; Many investors seem to believe that the economy out of recession can be passed directly to the dynamic growth, perhaps with a magic wand governments and central banks. This at least is what is shown for international stocks, according to the MSCI Global Index, which have been strengthened almost 80% from last March until today.
Exceptional financial and monetary measures, however, can not be maintained indefinitely in force and therefore the economies can recover only slowly, not to exclude the possibility of stagnation. Unemployment is speculated to remain at the level of the previous year and consequently the pressures on consumers will increase. These conditions, in turn will be reasonable to translate into weaker corporate results as the Alcoa probably should not be accepted with so much disappointment by investors. As explained by CNNMoney analyst, Paul Lamonika, revenues in the aluminum industry have taken a number higher than predicted by the markets. Lower gains than expected though were granted by high oil prices and the weakening of the dollar. Speaking at the Reuters analysts both Societe Generale and HSBC’s estimate that the ‘return’ to investors is the harsh reality of the fragile recovery and anemic profits will be accompanied by at least temporary pressure on shares. This is not just valid for Wall Street and major stock markets of Europe, but also for the markets of emerging economies, which can enjoy the benefits of high growth, but have before them the threat of a bubble.
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