Charles Schwab strategist: There are no screaming buys on the market

Currently, the stock market is a decent bet; however, there are no screaming buys at the moment, said at the Morningstar ETF Conference Liz Ann Sonders, the chief investment strategist at holding company Charles Schwab (NYSE:SCHW).

Sonders added that the market is likely to continue to grind higher but not without drama. She further said that there are no screaming signals for investors to buy for now. The holding company is neutral on stocks in the US, as well as in developed and emerging markets.

Schwab’s advice, says Sonders, is for investors to stay with their long-term, normal allocation in equity asset classes.

The US economy is at low risk of falling into recession, which is backed by Cornerstone Marco’s recession model which shows a 34% possibility of recession. Sonders said however, that the possibility is never zero.

Some oppose the aforementioned statement saying the there is earnings recession among the largest US company, which they say is a sign of something bad which is going to happen. Sonders disagrees. She said that earnings recession is not related to the economic recession, but it was caused by the strong US dollar and the slump in oil prices – issues that have already passed.

It turns out though that the presidential election will cause drama, as the stock market’s performance is usually weaker during elections when the current president is not running again. However, she said that trying to predict long-term market action during this election is a fruitless mission.

Sonders continued to say that leading economic indicators from the Conference Board show that there is a minor stress in the economy of the US, but definitely not recession.

Outside the US marker, Sonders said that she expects negative yields to persist by the time the European Central Bank (ECB) and the Bank of Japan (TYO:8301) continue their quantities easing policies. She concluded that what the two banks are doing to their respective economies is much bigger compared to what the US has done.

Leave a Reply