Credit Suisse: 6 Things Which Threaten Stocks

Credit Suisse has released the following six factors that threaten stocks: (1) "Both our fair value models are close to fair value (US ERP is 5.7% against a warranted of 5.6%)." (2)" We have never seen so much disruption to business models from new technology, regulation, and China in an environment where governments are helping labor relative to capital (via taxation and minimum-wage legislation)." (3) "We marginally raise our 2016 US EPS growth forecast to 1% from zero. The problems for corporates are: i) labor is getting pricing power, ii) operating earnings appear abnormally overstated compared to reported, and iii) one-off factors, which accounted for c.60% of margin improvement, are diminished." (4) "Buybacks as a style is underperforming." (5) "Seasonals are unsupportive: since 1988, May to September has seen flat markets." (6) "A fall in the 50-week MA below the 100-week MA sees down markets 56% of the time over the next six months." Credit Suisse has maintained its Neutral stance on equities and reaffirmed its year-end targets of 2,150 for the S&P 500 and 3,350 for the Euro Stoxx 50. At the time of writing, S&P 500 index is down 0.21 percent to 2,094.63 and Euro Stoxx 50 is also down 0.86 percent to 3,063.48.