The rally in stock markets has been a major theme in recent months, staying in the positive despite uncertainties, but a strategist at Roubini Global Economics has misgivings about the upside from here.
The European Central Bankflooded the markets with liquidity during two Long-Term Refinancing Operations that saw banks get more than $1 trillion in three-year loans at the central bank's record low rate of 1 percent.
“The catalysts have all pretty much switched from potentially positive things like the LTRO and the Greek bailout, et cetera, to now things that are potentially negative," Gina Sanchez, director of equity and asset allocation strategy at Roubini Global Economics, told CNBC.
"We have Spain simmering really right now in the background and that could be a dampener in the markets, and we’re going to head into earnings season, and we’re expecting that there might be some earnings disappointment," Sanchez said.
Heading into the second quarter, Sanchez advises those who prefer stocks to switch allegiance and look to corporate credit instead.
“We want to go up the capital structure. Right now we’re long credit and that really is the play that we’ve made,” said Sanchez.
“So still playing the corporate space, still not liking the sovereign government rates, those are probably going to be low for some time, so we really are up in credit,” she added.
Some prominent market names have recently made bullish calls on stocks, but Sanchez believes credit can still provide bang for the buck.
“We still see a little more to run on that, relative to the opportunities that we see in credit, and we think the closer you are to the cash hoard the better,” Sanchez said.