Strategists Split on Bond, Stock Market Signals

As bond yields rise and stocks trade flat, market experts joined “Morning Call” to analyze corporate credit spreads.

Jason Trennert, managing partner and chief investment officer at Strategas Research Partners, believes that spreads show that the market’s tolerance remains “very high.”

He also encourages investors to think of stocks as “long-duration” assets: “This private equity phenomenon basically makes the asset allocation trade in the next couple of years to be long stocks and short corporate credit.”

Although Trennert is “sympathetic” to executives who prefer focusing on long-term trends, he says it’s crucial for companies to provide quarterly guidance: “If you don’t want the scrutiny that goes along with being a public company, you shouldn’t be a public company,” he said. “I think it’s very difficult if you believe in free markets to suggest that investors should have less information.”

S&P 500

Stephen Wood, a portfolio strategist at the Russell Investment Group, says investors should be more “shy” on fixed income: “If you look at the spreads of the difference between emerging markets or high-yield debt, it has been pretty thin -- which means that companies issuing this debt have not had to pay for the risks that investors are assuming.”