The 'New Normal' Includes a V-Shaped Recovery of Capital Markets, Virtus Strategist Says
October 26 2009 - 11:05AM
PR Newswire (US)
Terranova sees opportunities in corporate bonds, currencies,
commodities HARTFORD, Conn., Oct. 26 /PRNewswire-FirstCall/ -- A
year after the equity and credit markets were frozen in the wake of
the collapse of Lehman Brothers, both markets are back to normal,
says Joe Terranova, chief market strategist at Virtus Investment
Partners (NASDAQ:VRTS), and panelist on CNBC's Fast Money. In his
most recent market commentary, Let's See How Far We've Come,
Terranova says most investors did not expect or accept that the
Armageddon scenario would be removed so quickly. (Logo:
http://www.newscom.com/cgi-bin/prnh/20090105/NEM020LOGO ) "There
will always be concerns, which will be priced-in accordingly, but
there is nothing overwhelmingly bearish out there right now," says
Terranova. Despite all of the chatter about "new normal," the
prospect of continued rising unemployment through 2010, looming
regulation from Washington, and the fundamentals of the economy,
the capital markets are back to normal. Terranova emphasizes that a
market recovery this year is similar to the recovery in 2003, which
means, among other things, that there may be more upside to come.
The last six months of balance-sheet analysis, stress testing,
interpreting unemployment reports, and checking regional price
comparisons in the housing market boil down to one thing: "The
recovery is clearly V-shaped and many investors have only recently
realized this it is very difficult to position for a recovery that
moves this fast." In his first- and second-quarter commentaries of
this year, Terranova emphasized the historic opportunities
available to investors as a result of compelling market valuations.
Investors who may have been sitting on the sidelines for the past
six months missed out on the recovery in the markets. Terranova
suggests that near-term opportunities will be in the same
investible themes that worked in the second and third quarters: --
Corporate Bonds - Default rates will peak in the 12-15 percent
range this fall, well below the 18-percent range priced-in this
past summer; this is a good chance to get ahead of the eventual
upgrade cycle of the rating agencies. -- Currencies - "We're
entering a period at the end of the year when those who did not
heed the call to invest into currencies will be disappointed," says
Terranova, singling out commodity currencies such as the Australian
and Canadian dollars. -- Commodities - Terranova, a trader who
specializes in commodities markets, believes that "massive
liquidity, low interest rates, and a resurrection of emerging
market demand is the perfect storm for commodities. This is the
time to be positioned for rising commodity prices." About Virtus
Investment Partners, Inc. Virtus Investment Partners (NASDAQ:VRTS)
is a distinctive partnership of boutique investment managers
singularly committed to the long-term success of individual and
institutional investors. The company provides investment management
products and services through its affiliated managers and select
subadvisers, each with a distinct investment style, autonomous
investment process and individual brand. Virtus Investment Partners
offers access to a variety of investment styles across multiple
disciplines to meet a wide array of investor needs. Additional
information can be found at http://www.virtus.com/.
http://www.newscom.com/cgi-bin/prnh/20090105/NEM020LOGO
http://photoarchive.ap.org/ DATASOURCE: Virtus Investment Partners,
Inc. CONTACT: Matthew Kirdahy, , or Andrew Healy, , both of
Middleberg Communications, +1-212-812-5665; or Joe Fazzino of
Virtus Investment Partners, +1-860-263-4725, Web Site:
http://www.virtus.com/
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