Credit Suisse Not Keen on US Stocks

El-Erian: QE trade getting old

PIMCO CEO & co-CIO Mohamed El-Erian shares his market concerns heading into 2014 and why he believes it is time to sell stocks now.U.S. equities face an ironic headwind that will lead them to underperform their global peers next year — signs of an economic recovery, Credit Suisse said.

U.S. growth prospects are upbeat, the bank said in a note. It forecasts 2014 growth of 2.6 percent in gross domestic product (GDP), with the possibility of surprising on the upside from factors including a possible pick up in government spending, a housing recovery and a potential rise in corporate spending.

These growth forecasts are precisely why it has an underweight call on U.S. stocks.

Bond yields are also set to rise as the Federal Reserve is expected to begin tapering its purchases of assets as growth improves, another factor typically heralding underperformance by U.S. stocks, Credit Suisse says. As rates rise, the U.S. dollar is likely to strengthen and the bank estimates that every 10 percent rise in the trade-weighted dollar takes 4 percent off U.S. corporate earnings.

It raises its end-2014 target on the S&P 500 to 1960 from 1900, suggesting an around 10 percent rise from current levels.

I was always told bonds were safe, are they?

Start by asking General Motor bond holders who got ZERO in the bailout, but with that said here are some important facts regarding bonds.  Currently our interest rates are near zero, when they raise the rates the bonds in the U.S. will plummet in value.

Currently the Fed is buying 90% of our bonds what will happen when they stop, who will buy them?  Just last month the Treasury renewed $7 Trillion in maturing bonds, and must continue to sell more in order to survive and pay our mounting baby boomer debt.

They can never stop this cycle!  Shadow Statistics put ‘s inflation at around 10% AND SURE TO GO HIGHER, so is it a good future protection of your retirement to lose value every year you hold them?  Diversification is more important now that any time in recent history, when baby boomers start pressuring the system you better have a chunk of hard tangible assets you can put your hands on, feel and pass down to your heirs.