If you’re waiting for an entry point, just pull the trigger, already. This market has more upside. The Fed’s got your back, at least for the rest of this year.
Equity markets started the week in risk-off mood, but Wednesday had the S&P 500 up 1.74% and the MSCI Emerging Markets Index up 1.10%. MSCI China was right in linen, maybe up one bip more. Delayed fiscal stimulus and an ongoing public health crisis is not scaring Wall Street. When Mr. Market hides in the closet, he doesn’t last in there for long.
“Continued extraordinary global monetary support will enable markets to move higher over the medium term,” says UBS CIO Mark Haefele.
With that in mind, global-minded investors and the Barstool crowd should take three actions:
Investors large and small are going to have to take advantage of volatility, and buy on the down days. Put cash to work “right away” is nearly always the best strategy.
“Given the uncertainty of the outlook, some investors may prefer to build up longer positions using near-term volatility,” says Haefele, recommending investors buy the dips.
The Russell 2000 Index, which focuses mainly on mid-cap stocks, is underperforming the MSCI EM, mainly because that American index is loaded with companies facing economic restrictions, while the MSCI EM is loaded with China and large cap stocks that have been a favorite of investors since the pandemic was declared in March.
UBS’ Haefele thinks the next leg of the rally will reflect a return to “more normal” economic conditions, and that should benefit value and cyclical stocks