The stock market is in a bottoming process now and has been since November 2008 despite a big plunge in equities in January, February and early March, according to Principal Global Investors global chief economist Bob Baur.
"Maybe the best news is that during the plunge ... economically-sensitive indices and sectors within the stock market did not make new lows," Baur said yesterday in Sydney.
He said the S&P, the Dow and many of the European indices booked lows well below the 20 November low, but the NASDAQ, the Shanghai Composite, the KOSPI and many other economically-sensitive indicators did not.
"The big plunge was led by financials and the fact that the high beta sectors did not make new lows and are also outperforming in this rally ... says to me even what has been happening since November has been a gradual process of the stock market trying to find a bottom," Baur said.
Because of delays and dithering in Washington, Baur said PGI has lowered its forecast for the US economy for the second half of the year.
"We now say it's flat. But you know, I'll take flat right? Flat is the new up. I mean if you can't go up, it's better to be flat than going down," he said.
"But even this meagre forecast assumes some continued credit market repair and if that doesn't happen, you know there is a chance that something really ugly could happen."
