Though we continue to believe that deflation will not happen, in this week's US Equity Strategy note, we discuss what could happen in a deflationary environment.
One thing that caught my eye is that the price-to-book multiple on the Nikkei 225 is 1.2x, while the S&P500 is almost double at 2x.
We believe that elevated economic and regulatory uncertainties will keep the markets volatile, and as such we continue to recommend our more defensive stance instituted in the last couple of weeks. Our favorite sectors are Utilities, Telecom, Healthcare and Staples, while avoiding Materials and Discretionary.
Wednesday, August 18, 2010
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