Fasanara Capital: risk of a heavy sell-off in the months ahead

Fasanara Capital: risk of a heavy sell-off in the months ahead

Upcoming catalysts for risk-off: US earnings, OPEC meeting

As anticipated in previous updates, we remain wary of more equity weakness to come, and stay put. In global equities, limited upside is combined with the risk of a heavy sell-off in the months ahead. We keep dry powder ready should the market become way cheaper between now and September, as we expect.

Within this background, two catalysts are particularly relevant over the next few days:

1. US Earnings next week

We believe that acknowledgment of falling earnings will meet expensive valuations next week. Negative EPS guidance runs at a 10year record, while P/E Shiller adjusted at 25.80 stands at an historical highs, most often associated in...