We have a dichotomy in the market:1.We need to see better macros,and 2.We need to see something better out of Euro policy makers.Our bias is to believe that the longer this continues,the weaker the numbers will be;our bias is to the downside.
We need more clarity out of policymakers,both U.S. and European-but especially European.I'll believe it when I see it.We haven't seen any evidence they are taking concrete measures.Given the 17 parliaments,it's by definition a slow process.
We favor U.S. equities such as consumer staples and defensive cyclicals such as tech.There's a lot of risk with industrial cyclicals and energy.Materials and industrials are lagging.
Over the next year or two,China will see 7-8% growth.It's not falling off a cliff,but slowing.Near term,event risks out of Europe and decelerating GDPs get us quite concerned about global equity markets.Medium term,we are constructive on equities.
Jeremy Zirin is Chief Equity Strategist at UBS Financial Services.UBS offers wealth management,investment banking,asset management and business banking services to clients worldwide,as well as retail banking in Switzerland.
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