U.S. equity indexes have followed the typical presidential election year cycle in an exaggerated fashion to date with positive jobs data in the first quarter followed by a slide back toward anemic job growth in the second quarter (see “It might be, it could be, it isn’t a robust recovery,” below).
Perhaps exaggerating the typical election, Dwyer also acknowledges that it is hard to believe that the S&P 500 remains in a bull market that began in 2009. “Frankly, it is impossible to trade these day-to-day gyrations that are driven by unpredictable news,” he says, adding that Canaccord has little confidence in short-term calls but looks at intermediate-term indicators to see if any change in its bullish tactical view is warranted.
Also taking a longer-term view is Morningstar, where Paul Larson, chief equities strategist, says that the nearly 2,000 stocks covered by his company are mildly undervalued now.
“We’re roughly 10% undervalued for the median stock at this point,” Larson says (see “Undervalued equities?” below). “We don’t make any projection regarding when the reversion to fair value actually is going to happen. But to just take the temperature of the market, the market does look undervalued.”