When is comes to investment prognostications, the crystal balls of market strategists sometimes are no more reliable than Magic 8 Balls. Still, strategists are paid to give their forecasts, investors want to hear them, and articles such as this provide a forum for them.
In that vein, a panel of top investment chiefs sat down today at the Inside ETFs conference in Hollywood, Fla. to offer their two cents on what investors can expect for the remaining 11/12s of 2015.
There weren’t any sparks of major disagreement among the panelists, and most seemed on board with the idea that last week’s news about the European Central Bank’s massive bond-buying program, or quantitative easing to help inflate the continent’s moribund economy, should be good for the equity markets there.
That’s not to say all agreed Europe’s QE will actually help the regional economy. Brian Wesbury, chief economist at First Trust Advisors, offered that QE didn’t really help the U.S. economy and currently isn’t helping the Japanese economy, and he expressed doubts it will help the European economy.
Richard Bernstein, CEO and chief investment officer at Richard Bernstein Advisors, countered that for investors the issue of QE isn’t about the economy, it’s about equity performance in those countries that have implemented QE. “Ultimately, I think it [QE] will benefit the Japanese stock market,” he said.
Regarding Europe, he said the fact the ECB has reversed prior tightening policies in the face of deflation and is now opening the spigot is the key takeaway for investors.
“Debating market returns on European QE is immaterial to the discussion,” Bernstein said. “Going from tightening to easing mode will be better for the markets.”
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said European QE is a different beast in that it’s a more blunt instrument than what occurred in the U.S. or is now taking place in Japan.
“My take is that QE in Europe is more contemporaneous to a recovery that’s already going on in the European economy because surveys show marked improvement in investor and business confidence,” he said. “And the gas tax cut will also be helpful to the European consumer. Collectively, we’re pretty constructive on European equities."
Elsewhere overseas, panelists were cautious about emerging markets and warned investors not to look at this broad category as a monolithic entity. In other words, selectivity is paramount. Indeed, Russia’s recent woes regarding the Ukraine crisis and plunging oil prices have whacked its markets and left the Micex Index of the 30 largest and most liquid Russian companies trading at four times earnings.