Salient to Investors:

Gina Martin Adams at Wells Fargo Securities says:

  • Investors should go against the herd as the market is overbought and sentiment is at levels seen at peaks and tops, fundamentals are weak with economic data in January missing expectations, and there is consistent deceleration in earnings growth. Improving housing and autos is not new news.
  • Ever year people talk about the great rotation from bonds into equities. There were strong fund inflows in the first week of January but since then  have been mixed.
  • The January effect doesn’t mean much, with no correlation over the last several years: some impact over the very long-term.
  • Apple stock weakness is spreading to tech, and industrials will weaken as inventories overbuilt. The financials are the only encouraging earnings picture and their taking over some leadership from technology is encouraging.
  • The best indication of equity multiples is leading economic indicators over time: the bounce seen in Q4 is yet to prove sustainable.
  • It will be really difficult for equities to absorb tightening by central banks when it comes: this story will be talked about in 2013 but nothing done until 2014 at the earliest.
  • Wells Fargo are expecting only 1.5%-1.7 % US GDP growth in 2013.

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