The current market "is very much based on fundamentals," said Paul Schulte, head of multi-strategy research at Nomura International. He told CNBC what he's watching "as we move into Monday."
“The world is awash with liquidity,” Schulte told CNBC.
“I think selling here makes very little sense, when equity markets are built on credit markets.”
The credit markets are telling us that there’s more to go on the equity markets, he added. He told investors to watch the following four points ahead of next week’s trading:
1. Sovereign credit default swaps "are rallying like crazy—they’ve come down tremendously in the last week or so," he said.
2. Investment grade and high-yield credits—"Some of them are getting to year lows," said Schulte. "The rally’s amazing."
3. Emerging market credit defaults swaps in the sovereign and the corporates are also "rallying like crazy...Some of these are reaching all-time lows in terms of rallying, so all time high prices in terms of credits."
4. Liquidity—"That TED spread that everyone thought would never go below 1 percent just hit 10 basis points yesterday," he noted.
- Watch Schulte's Previous Appearance on CNBC (Feb. 11, 2010)
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More Market Views:
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- Stock Picker: Baltic Dry Index Still a Good Indicator
- 10 Picks to Play the Market Rebound: Portfolio Mgrs
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CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Track the VIX Here
- Where's the US Dollar Today?
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CNBC Slideshows:
Cramer's 12 Stocks to Play the Recovery
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Disclosures:
No immediate information was available for Schulte or his firm.
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