Tim Ghriskey, CIO, Solaris Asset Management expects the market euphoria to continue but is wary of weaker economic data which might considerably impact the bourses unless the situation improves.
Speaking to CNBC-TV18, Ghriskey adds that strong employment data is a positive as it boost spending which would be the focus of the markets once the earning season comes to an end.
Below is the edited transcript of the analysis on CNBC-TV18
Q: Who said 'sell in May and go away'?
A: That strategy is certainly not working today and failed so far this week. The economic data is very uneven and it is not all good news. There was persistent weakness in March and April so, it needs to be seen if the weakness will continue in May. However, the employment data was strong on companies, especially smaller businesses, that are aggressively hiring. Though it is a positive trend, the underlying strength of the economy is a bit suspect.
Q: How long will jobs data push buying in the market place with the earning season coming to an end and little economic data of any significance to expect over the next few weeks? So what will drive markets and what is your take on earnings?
A: Earnings for big companies were actually quite good and the revenues were okay too. Earnings of smaller companies did not surprise much on the upside. But there are a lot small companies scheduled to announce results as the earning season progresses.
The issue rests more on the outlook where was definitely lowered for Q2. That should be no surprise because that is when the sequester had its biggest impact in terms of the economy and companies. Those cut-backs in government spending are certainly going to have an impact on Q2 GDP.
So, the outlook is very subdued and analysts are looking for a strong second half but that is more of hope especially with some of the weak economic data.
Certainly, the rise in employment is good news. Employment data helps consumers — consumers are considerable drivers of the US economy in particular and as long as people are getting jobs, they will continue to spend and that is probably what the market is going to focus on after the earning season.
So, I expect the euphoria in the markets to continue but am a bit wary that the other economic data might be negative and eventually start to impact this market unless it turns around.