LONDON, April 8 (Reuters) - Investors are divided over the significance of recent signs of improvement in the world economy and rises in global stock markets.
One side says it is all just a bear market rally that will soon end; the other that there is light at the end of the tunnel after the massive disruptions over more than 1-1/2 years.
Here are some recent comments:
UPBEAT
-- Barclays Wealth, in a report entitled "First signs of a thaw":
"Macro news is beginning to shift tone, no longer being uniformly bad. Policymakers continue to act aggressively, easing fiscal policy and introducing unorthodox means of stimulating activity, such as quantitative easing.
"Financial markets are adjusting in order to reflect the reduced risk of a depression. Credit spreads should narrow accordingly and, in time, equities should recover."
-- BlackRock, in a weekly note from Bob Doll, global chief investment officer for equities:
"We do believe that the recession has peaked and that the economy will stabilise in the second half of this year...
"Our confidence is growing that global equity markets are ending the bottoming process that started with the waterfall decline last October and that the lows from early March do represent the lows for this cycle."
-- Merrill Lynch Global Wealth Management, in a note entitled "Economic free fall looks to be halted" by Gary Dugan, chief investment officer:
"(The gain in) equities reflects the hardening optimism that the worst of the recession is now behind us and that some sort of revival, regardless of strength, lies ahead.
"True, coincident data, such as the latest U.S. payrolls report, still indicate the U.S. is deep in recession valley and there are any number of hurdles to cross in coming weeks.
"Yet, with a 24 percent rebound in the MSCI World Index since its low, the discounting machine is certainly looking ahead to better times. We are convinced this market rally has staying power."
DOWNBEAT
-- Morgan Stanley, in a note entitled "Bear market is not over: Selling today":
"We are selling equities from neutral to underweight. We continue to prefer cash over equities as we have done throughout most of this bear market, and we continue to prefer earnings stability, strong balance sheets and low valuations.
"Our three signposts to identify the end of the bear market do not flash green. We wish to wait for fundamentals to be close to trough before turning more bullish. The three fundamentals we look at are: 1) earnings; 2) U.S. housing; and 3) banks' balance sheets.
-- Julius Baer Asset Management, from Stefan Angele, managing director, in an interview with Reuters:
"We do not see a broad-based recovery. We do not believe this is a major bull trend.
"This is not March 2003.... We do not see enough evidence to base a positive outlook for risky assets on."
-- Allianz Global Investors' RCM, in a note from Neil Dwane, European chief investment officer:
"The recent rally in equities has to be put into context. January and February were a much worse start to the year than anticipated. Hopes and expectations pinned to Obama's inauguration have been disappointed. Markets want to believe that politicians and central banks will effect a reflationary rescue of the current dire circumstances.
"The market has rallied quite aggressively, and technically it could still rally another 3 percent to 5 percent, but we do not believe that this is the beginning of the next bull market, because there has not been, as yet, a capitulation-type event which historically signal the bottom of the market." (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)