Big investors haven’t capitulated yet, so be wary of this market, warns SocGen strategist

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A tech-led recovery isn't sustainable, according to this strategist.

U.S. jobless claims revealed millions more have been forced out of work due to the coronavirus crisis, while we started the day with bleak Europe purchasing managers index data.

“I think there might be some limited upside at this point, because we would need to see a rotation out of those long-duration stocks into more cyclical ones like discretionary, energy, industrial, reflective of growth actually picking up and really a V-shaped recovery being priced in, rather than this tech-led recovery, which in my view is not sustainable,” Huynh told MarketWatch.

“That’s why we’re being much more discriminate, we like credit over sovereign bonds, we still have some equities,” said Huynh, but added that a balanced portfolio makes more sense than too much emphasis on equities right now. The chart “Is greater economic uncertainty an insurmountable headwind for stocks?” BTIG strategists Julian Emanuel and Michael Chu answer that with this chart:

Drugmaker Eli Lilly LLY, +2.64% reported upbeat earnings and retailer Target’s TGT, -0.05% online sales soared. Still to come is Domino’s Pizza DPZ, +5.07% and chip maker Intel INTC, +6.63% after the close.

 

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