A bit of a lull

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Markets are experiencing a bit of an information gap. Easter holidays have started, central bankers have done their bit, and the investment community will next focus on the first quarter earnings season. According to FactSet earnings insights of the 11000 plus stocks, the research community analyses, they have just over 50% as a buy, just over 40% as a hold, and a meagre 6% as a sell. That’s pretty much in line with where they are historically, which seems staggering to me, that the analyst community have just under 6% of the investable market as a sell. As most companies pay a broker to tell the investment community what a wonderful business they are, I guess it’s less surprising, but it does remind you to treat much of what you read with a healthy deal of scepticism.

Again, according to FactSet, the average strategist has the S&P 500 gaining another 7% in the coming 12 months. Many analysts will have pushed up their targets in the past weeks, as the S&P has probably met most of their yearend targets in the first quarter. Over the past 5, 10, and 15 years, analysts have over-egged the price target by varying degrees. That would suggest we are in for an unexciting 12 months for US stocks. But who knows?

Analysts expect another positive year-over-year earnings recovery this quarter, which may not be as strong as the first quarter. Stock market bulls remain focused on a resilient economy combined with the prospect of easier monetary policy. Bears will worry the inflation data wont fall quick enough, the Fed will hold back and the soft landing scenario will not play out. Happy Easter everyone .