Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 08 February 2012 at 14:34 GMT

Global stocks enter bull market

Head of Equity Strategy / Saxo Bank

Is fear a loser's game?

Since global stocks hit the bottom on October 4, 2011 in the midst of the European debt crisis, they have rebounded by an astonishing 20 percent (see chart below) as of today's session thus entering what is known as a bull market.


MSCI World enters bull market

Source: Bloomberg L.P.

The rally really brings back the words of Warren Buffet: "Be greedy when others are fearful" on a shining plate. It seems many investors never learn from the past and let their emotions control the show, instead of the numbers. On average long/short equity hedge funds are at the lowest net exposure levels since June 2008 and therefore many hedge funds have missed out of the recent rally.

Looking back to last fall, when everybody was in a bearish mood, fear probably caused a lot of investors to miss a buying opportunity.  Maybe they should try to eradicate emotions from the investing equation. When markets are most volatile, most investors should turn on off the financial TV, skip reading the financial newspapers and instead enjoy life.

Greek PSI around the corner?

Local newspapers in Greece are reporting that a PSI deal might be presented tomorrow if the Troika's demands are accepted by the Greek government today. No matter what happens, the events in Greece will continue to be the focal point for traders.

US futures are flat ahead of the open

While European stocks are rallying 0.7 percent today, US futures are only up 0.1 percent.  With the Greek PSI deal dragging toward an end, investors might step up as the earnings season continues to be okay with a positive surprise hit ratio of 68 percent.

Cisco and Groupon earnings will be watched closely for two different reasons

As we wrote in our 3 numbers to watch today, earnings releases from Cisco (after the close) and Groupon (no time given) will be wacthed closely.

Cisco is expected to report 2Q EPS of 0.43 up 55 percent from 0.28 last year, as the company's turnaround is progressing, driven by cuts in the number of employees and closure of several business lines. Another key thing to watch is Cisco's comments about government technology spending, as it is good proxy for government spending.

Groupon is interesting as it is the company's first quarterly report since the IPO last year. Investors will watch the second derivative on sales growth (the changes in growth rates QoQ and YoY, red.) and it could be crucial for sentiment overall in these new online companies that have IPO'ed lately.

Also after the close, Visa will report earnings and their numbers will provide insight into global consumer credit formation. We will comment on those numbers tomorrow.


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