According to the company’s head of investment strategy, there is a tug-of-war between marketplace doubt and fear of falling out.
“Nearly all our customer discussions are all about the rally appearing unjustified and markets becoming out of touch with the market.”
On the opposing side, she is seeing a purchase the dip mindset and promote resilience — using a couple of names such as large technology capturing the most attention.
“This looks like a set-up that’s indicative of continuing momentum,” stated Shue, a CNBC contributor.
However, any large letdown, Shue warns,” might have debilitating consequences and will lead to greater volatility.
“We might see a few large down days like we found in March and June because this occurrence of disappointment which could observe all investors heading to the same comparatively modest departure,” explained Shue.
Shue, who manages $104 billion in assets under management, admits earnings season may surprise to the upside since the bar is so low.
“We could see a huge upside surprise like the financial information,” she added. “Now, do not get me wrong, the amounts are still likely to be dreadful. However, I believe relative to expectations, it is likely that the worse is baked in at this stage.”
While earnings may create optimism, Shue asserts rising doubt concerning the virus along with the presidential elections is severe headwinds.
“Markets do not necessarily favor 1 party or another. What they dislike is doubt and also the possibility of purposeful change,” she noticed. “One which could be a threat into the marketplace would be greater taxation, and I feel that is something we will see the market begin to digest even a little bit longer “
As it is uncertain whether doubt or fear of missing will acquire the tug-of-war, Shue, considers investors should be careful without becoming too defensive.
“We do observe two-manner danger as we look on the subsequent 12 months,” Shue said. “When we’ve got a quicker recovery, even in the event the spike in virus instances doesn’t lead to a wide-based shutting down of markets throughout the nation, we can observe a few of those cyclical and much more value-oriented names bounce greater.”