And now UBS is warning on stocks.
In a note to clients on Wednesday, UBS strategists Ramin Nakisa and Stephane Deo warn that stock prices are not consistent with near-term risks.
“We think the calm of markets is not consistent with near-term risks,” the strategists write. “There are a number of forthcoming events that could destabilize markets and create uncertainty: chiefly the ongoing Greek negotiations but also to a lesser extent the March FOMC meeting and the UK elections.”
This note out of UBS comes a day after analysts at Credit Suisse cut their price target on the S&P 500 for the middle and end of 2015.
UBS adds that the market is currently being “very sanguine” regarding the possibility of a sell off, writing, “We believe it is time to reduce equity exposure, at least tactically.”
The firm adds that in extreme market scenarios, like a Greek exit from the eurozone, only Treasuries will provide protection to investors.
On Tuesday, Credit Suisse cited the following “red flags” for stocks in the near-term:
- US and global earnings revision are at 6- and 3-year lows respectively, levels which have been associated with flat markets in the past.
- High-yield spreads have risen more than they normally do prior to a bear market.
- Equities have re-rated while inflation expectations have fallen, which is unusual.
- The macro environment is less supportive: Chinese data is deteriorating, US wage growth is rising (hurting US margins), and Greek brinkmanship will likely continue to July.
On Wednesday, the eurozone’s finance minister were set to discuss the terms of Greece’s bailout during an extraordinary meeting that was called just last week.
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