This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Barclays Recommends Investors Reduce Developed Market Equity Exposure

Stocks in this article: BCS

With the Fed no longer focused on pushing asset prices higher, gains in stock and bond prices will be harder to come by, according to Barclays’ latest flagship quarterly research publication, Global Outlook: No longer a rising tide lifting all boats. Over the past four years, the success of quantitative easing has created a favorable market environment; however, with Fed “tapering” looming, better economic growth will likely be needed to drive stocks significantly higher.

“The Fed has achieved its QE objective of raising asset prices and further significant price appreciation would risk another asset price bubble,” said Larry Kantor, Head of Research. “For the first time since the crisis, stocks and bonds are likely to move in opposite directions, with the ups and downs in economic activity returning to center stage. This raises the bar for successful investing, since achieving mediocre growth will no longer be enough to push equities higher, compelling us to be less bullish on developed market equities.”

With Fed tapering on the horizon, however, the market may have gotten ahead of itself by pricing in a significantly closer onset of monetary tightening. While the Fed would be justified to declare victory in its quest to push up asset prices, it is more difficult to make the same argument for the economy. Although the unemployment rate is falling, near-term prospects for growth in the US remain challenging, given the ongoing effects of fiscal tightening. Moreover, evidence of a pickup in global growth outside the US is unlikely to emerge in the next few months.

If this is correct, for the first time in a while, some areas of fixed income will be more attractive than major equity markets from a tactical perspective. This is particularly true for assets that have suffered most from the recent market turmoil, including agency mortgage-backed securities and high yield corporate bonds. A number of EM equity markets fit into the same category, including those in Mexico and Korea.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs