This is a note wrote for a global famous insitutional fund back on Monday
1) Banks are much better: from balance sheet analysis, we know the banks will have a great earnings again. In 2008, the investment grade bond and high yields bonds were trading in a big discount, which hurt them when mark to market.
2) GDP growth is slow but continues growing. Without inflation adjust, GDP is growing around 5% in 2011. Remember the Fed rate is 0%, so the inflation is not really hurting the corporations.
3) Week $ will give a big advantage of US tech company and banks as well.
4) Very good corporate balance sheet and lean investment. The low oil price and 0% interest rate will help companies to make investment decisions.
5) Italy and Spain 10 years bonds are less than 5% now, much better than June and July when they were 6% plus and S&P was 1350.
6) Euro Libor is low @ 1.30% for 3 months ,much better than two months ago
Key point to March 2009 rebound, the investment bonds hit bottom in Nov 2008 and high yield bonds hit bottom in March 2009.
August 2010, DIJA was around 9500 but the investment and HYB still doing very well. In Oct, then banks reporting very health earnings. Market volatility is good for banking result.
Now is quite similar to Aug 2010 again.
Economy analysts are used to predict the company earnings but could Not replace company and sector analysts. Please looking at all strategist from J P Morgan to Blackrock, they believed the stocks have been priced in a recession.
The historic low 10 treasures will make people rush to equity market as well.
Please read this, all strategist believed low GDP growth 1-3% will have a very well corporate earnings .
Risks to note, there is no big historic event (like U.S default, big natural diastase), then we should see a rebound in late Sep till end of the year even without QE3.