Canaccord Genuity Morning Coffee on Portfolio Strategy: U–S–A! U–S–A! U–S–A!
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Canaccord Genuity Morning Coffee on Portfolio Strategy: U–S–A! U–S–A! U–S–A!
In Canaccord Genuity U.S. Portfolio Strategist Tony Dwyer’s most recent update, he says what goes up can stay up. He notes that the market’s upward drive into near- and intermediate-term overbought territory might lead to a bad day or week, but he doesn’t believe there should be a significant and sustainable drop over coming months. Such tight intraday ranges over past 45 years have led to near 8% gains over the next three months and since the 2009 bear market low, initial extreme intermediate-term overbought conditions that follow an extreme oversold condition have led to additional gains of 8-15% over next 3-5 months. Dwyer expects the VIX to move to 10 at some point in this cycle, driven by its relationship with the spread between the high-yield debt and U.S. Treasury yield. Looking at the credit market, Dwyer highlights the following: 1) Swap spreads continue to suggest limited stress in the Interbank lending arena; 2) Corporate spreads to the 10-year U.S. Treasury yield and high-yield CDS continue to grind lower despite the surge in new corporate credit issuance – especially in high yield; and 3) All signs point to an important and sustainable low in the 10-year U.S. Treasury yield. Dwyer remains bullish on the U.S. equity market and is maintaining his S&P 500 targets of 1,575 and 1,650 for 2012 and 2013, respectively.
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In Canaccord Genuity U.S. Portfolio Strategist Tony Dwyer’s most recent update, he says what goes up can stay up. He notes that the market’s upward drive into near- and intermediate-term overbought territory might lead to a bad day or week, but he doesn’t believe there should be a significant and sustainable drop over coming months. Such tight intraday ranges over past 45 years have led to near 8% gains over the next three months and since the 2009 bear market low, initial extreme intermediate-term overbought conditions that follow an extreme oversold condition have led to additional gains of 8-15% over next 3-5 months. Dwyer expects the VIX to move to 10 at some point in this cycle, driven by its relationship with the spread between the high-yield debt and U.S. Treasury yield. Looking at the credit market, Dwyer highlights the following: 1) Swap spreads continue to suggest limited stress in the Interbank lending arena; 2) Corporate spreads to the 10-year U.S. Treasury yield and high-yield CDS continue to grind lower despite the surge in new corporate credit issuance – especially in high yield; and 3) All signs point to an important and sustainable low in the 10-year U.S. Treasury yield. Dwyer remains bullish on the U.S. equity market and is maintaining his S&P 500 targets of 1,575 and 1,650 for 2012 and 2013, respectively.
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