Stage set for post-Thanksgiving rally: Nick Parson

Nick Parson, head-market strategy-Europe, National Australia Bank, says that he feels that a deal will be reached on the European budget. He don't feel that it an issue for the markets. The scene is setup for a post Thanksgiving rally which could extent well into the December.

Below is the edited transcript of his interview to CNBC-TV18. Q: Is data points and manufacturing numbers adding an extra edge to the market sentiment today?
A: Many things are acting together. The Chinese data is good and there is a feeling that the European data has lost its ability to disappoint because none of the European data that we saw over the last four weeks has been worse than expected. The data was consistently worse than expected through the spring and into the summer. The expectations are so low that we have stopped being surprised by it and when investors are still relatively underweight. The risk asset data no longer surprises to the downside. Few factors are required to move the major indices higher and I think they will run further from current levels.    Q: Fiscal cliff in the US and the EU looks to face its own budget cliff as it has been termed at this point France, Germany, UK, all standing at different positions. Ahead of the crucial EU budget summit what do you think are the expectations at this point? Are markets banking on any concrete agreement?
A: I am confident that a deal will be reached on the European budget. There will be long bitter acrimonies discussions and at the end of a discussion a budget agreement will be reached and all European leaders will go back to their national parliaments and declare a victory. I don't think it is an issue for the markets. It would be serious if they fail to reach an issue on the EU budget and then continue to lecture Greece about its own finances. A budget deal will be found. It may take longer than anticipated but I am confident that the deal will be found. It is not a cliff that the European economy is about to drive over. Q: There are chances of reaching a budget deal and similar hopes from the euro group meeting on 26 November on the Greek aid deal. Is time running out for Greece at this point?
A: Yes, the time is running out but we were very encouraged this week to find the reason for the failure was not criticism of Greece; the Troika went out of the way to praise the efforts taken by the Greek people and the government. There is a stumbling block between the IMF and the ECB.
We can think of a situation where the EU reaches its budget where a deal is found for Greece and globally the investors are still underweight. The scene is setup for a post Thanksgiving rally which could extent well into the December because I haven't met a single investor globally who is even at a benchmark rate in equity market, let alone overweight. Everyone is underweight risk and the only weight from underweight to neutral is by buying the market.