U.S. Trust's Take on Recent Market Conditions

From the EDC (Aug 10 2011) Financial Services

1. EDC Director Chris Borowiec offered this short analysis of the recent twists and turns in the equity markets to the EDC to share with our readers:

   From U.S. Trust:

   We remain bullish on equities despite the significant pullback over the past few weeks.  While the risk of another recession can’t be ignored, we still believe that the more likely scenario is that the U.S. economy continues to grow at a subdued pace.  Corporate profits have been very strong in the second quarter, with over 70% of the companies exceeding our expectations.  Our year end price target for the S&P 500 is now 1250 to 1350, suggesting that there is a bias to the upside for the rest of calendar year 2011.  We believe that the most attractive sectors are those tied to the economy, for example energy, materials, industrials, and technology—and we continue to underweight health care.  On the fixed income side we favor high quality corporate and tax free municipal bonds, with an emphasis on relatively short maturities.  Given that continued growth in the emerging markets countries like China, India, Brazil, and Russia will put a strain on the world’s natural resources, we continue to favor commodities as a hedge against inflation, and because this asset class has attractive diversification benefits. 

   L. Clark West, CFA, CFP, CAIA

   Senior Vice President

   U.S. Trust

   We look forward to providing other updates from U.S. Trust on market activity and we encourage our Directors and members to contribute similar posts from their expertise in their industry sector.

    

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