: Worlds Leading Management Portal. MBA | Classroom, Boardroom and Beyond

Go Back Forums - Your MBA Online Degree Program and Management Students Forum for MBA,BMS, MMS, BMM, BBA, students & aspirants. > Quiz , Marketplace and Community games > Stock Markets Tips & Gyan !!

Sentiments, not fundamentals driving European mkts

Sentiments, not fundamentals driving European mkts

Discuss Sentiments, not fundamentals driving European mkts within the Stock Markets Tips & Gyan !! forums, part of the Quiz , Marketplace and Community games category; ...



LinkBack Thread Tools Display Modes
Sentiments, not fundamentals driving European mkts
 (1 (permalink))
Epic Research
epicresearchindore is an unknown quantity at this point
Analyst/Research at Epic Research
Management Paradise Guru
Status: Offline
Posts: 2,134
Join Date: Jun 2012
Sentiments, not fundamentals driving European mkts - August 8th, 2012

Martin Lueck, economist, UBS, says that Draghi's comment has inspired some confidence in the markets. However, he says that from the fundamental economic prospective things are weak. The markets are currently moving on sentiments.

Below is the edited transcript of his interview to CNBC-TV18.

Q: Lot of optimism is coming in for the European markets. What are they factoring in? What is their higher probability that the ECB possibly will go ahead with some bond buying at some point?

A: There has been much skepticism over the first part of the summer regarding the Europe crisis and now Draghi has announced that the ECB will go back into bond buying and later confirming its conditions in the conference.

This has inspired some confidence to the markets. On one hand, the business cycle outlook is deteriorating for the euro area. Industrial orders are down in Germany, we have weak economy number from Italy. From a fundamental economic perspective, there is not much reason for optimism. But again it is more sentiment seeing optimism based on the future bond buying by the ECB.

Q: How much more do you think the markets or risk assets have to rally from here given the sentiment turnaround? Do you think most of it is played out?

A: Yes, but it is very hard to gauge against the backdrop of the sentiment-driven markets. From a fundamental perspective, European equities still do not look expensive, but with the backdrop of earnings expectations they might change once the economic outlook deteriorates, guidance of companies' changes and usually analystís expectations change as well on the back of that.

Though equities do not look expensive today, they might look expensive in next three month, when the guidance and consensus goes down. So, we need to take a cautious stand from here.

The slide that we saw over most of the summer so far and then strong recovery can be attributed to sentiment changes and not back of fundamental information.

Q: S&P is above 1400. What is the US markets factoring in at this point in time, is there higher probability that the FOMC might act?

A: It is a funny combination of two factors. On one hand, there is a fraction of the market that is still expecting a sufficient economic weakness for the Fed to act another time. So, there is going to be the QE3 story.

But this is against the backdrop of further weakness. Another fraction of the market, which is hoping better number on health prices, the whole economy. In the first place, the whole consumer economy is bottoming out.

So there is another fraction of the market hoping for fundamental data which is the opposite of further hopes for QE3. So, in the US it a two-tier market, which is right now moving both in the direction of higher equity prices, but this could turn further worse once one of the two camps gets the majority.
Friends: (0)
Reply With Quote
Your Friendly Helper
Rep Power: 10MBA Helper
Automatic Reply for links related to your post


I am your friendly Helper. Check the related links below which might be of your interest.

Not a Member Yet ?? Sign Up Now. Click Here

Looking for something? Search the Forums

Need Help on your Research Report ? Ask for Help or Help Others and create your network. Give back to the community by sharing your knowledge in terms of notes, research reports, discussions, articles etc..

Help Yourself and Help Others

Ask us, we are here to help

Related to Sentiments, not fundamentals driving European mkts

Similar Threads

Thread Thread Starter Forum Replies Last Post
Solutions Manuals, Instructor Manuals, Test Banks collection 2012 Soso M General Talks 18 November 9th, 2014 08:43 PM


driving, european, fundamentals, mkts, sentiments

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are Off

Ľ Login
Forgot Password?  New User?

» Recent Threads

City National...
Last post by Ahana Pal
1 Minute Ago 12:04 AM
0 Replies
City Holding Company :...
Last post by Ahana Pal
3 Minutes Ago 12:01 AM
0 Replies
Citrix Systems, Inc :...
Last post by Ahana Pal
6 Minutes Ago 11:58 PM
0 Replies
Citizens, Inc : Public...
Last post by Ahana Pal
9 Minutes Ago 11:55 PM
0 Replies
Citizens Holding Company...
Last post by Ahana Pal
12 Minutes Ago 11:52 PM
0 Replies
Citizens First...
Last post by Ahana Pal
15 Minutes Ago 11:49 PM
0 Replies
Citizens Financial...
Last post by Ahana Pal
17 Minutes Ago 11:46 PM
0 Replies
Citizens Community...
Last post by Ahana Pal
20 Minutes Ago 11:44 PM
0 Replies
Citizens & Northern Corp...
Last post by Ahana Pal
23 Minutes Ago 11:41 PM
0 Replies
Citigroup Inc : Public...
Last post by Ahana Pal
26 Minutes Ago 11:38 PM
0 Replies
Citi Trends, Inc :...
Last post by Ahana Pal
29 Minutes Ago 11:35 PM
0 Replies
CIT Group Inc (DEL) :...
Last post by Ahana Pal
32 Minutes Ago 11:32 PM
0 Replies
Cisco Systems, Inc :...
Last post by Ahana Pal
35 Minutes Ago 11:29 PM
0 Replies
CIS Acquisition Ltd :...
Last post by Ahana Pal
37 Minutes Ago 11:26 PM
0 Replies
Cirrus Logic, Inc :...
Last post by Ahana Pal
40 Minutes Ago 11:24 PM
0 Replies

» Ads

» Projects Helpline

Project report on USANA...
Last post by Kirti Soni
1 Week Ago 03:28 PM is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.

Management Paradise
About Us
Contact Us
Kartik Raichura
Terms & Conditions
Privacy Policy
Copyright © 2004 - 2013 Management Paradise. Site Developed by