STAFF NEWS & ANALYSIS
The Two Faces of Eve … er, Credit Suisse
By Staff News & Analysis - March 14, 2013

Credit Suisse urges investors to jump into stocks … One month after turning cautious on global stock investing, the investment committee of Credit Suisse Group's U.S. private bank has reversed course. "Plentiful liquidity, attractive valuations and low inflation make equities among our best options in an asset allocation context," a team led by Barbara Reinhard, the unit's chief investment strategist, wrote in a note to clients. − Oregon Herald

Dominant Social Theme: Jump right in. Now that stock exchanges are hitting all time highs it's become a good opportunity for small investors.

Free-Market Analysis: From the above excerpt we can see that Credit Suisse has changed its mind about equities. A month ago … no way. And now … way to go!

The recommendation comes on the heels of reports that various billionaire holders of equity are selling out of the equity markets as fast as they can. In fact, it's been speculated that one of the reasons for the market run-up was to oblige certain billionaires and give them a chance to retrieve assets.

And now the little investor is being urged to "invest." This is an asset play. Equity markets are suddenly deemed to be attractive. It's not quite clear why, of course … but we do have a suspicion. When the little guy starts buying big, that's when markets start to waver and even collapse.

Of course this time, investors haven't been biting and this is causing much concern for Western financial elites. While investors CAN make money in the stock market – and probably have been – the idea that one ought to move in and out of asset classes based on the received wisdom of larger brokerage firms is flawed at best.

It's not an "analysis." The word "hustle" comes to mind.

And while we are on the subject of promotions, Credit Suisse's publication The Financialist is available in many places now. Reuters regularly features articles from it and it gets a lot of play on Google as well. This only goes to show how mainstream pubs can quickly build circulation in the digital age with the right promotional elements in place.

There is nothing special about the The Financialist. Its articles are nondescript and its coverage is uninspired. But perhaps that is the point. The Financialist's writers and editors can be counted on to serve a bland fare of material guaranteed to provide mainstream outlets with additional content that supports elite dominant social themes.

One such theme of course is stock market investing. While no one probably expected Credit Suisse to reverse its anti-equity recommendation so quickly, chances are various powerful forces made their opinions known to Credit Suisse top officials relatively quickly. The result? A quick "change of heart." Here's more from the article excerpted above:

The strategists were alarmed in early February about political stalemates in Spain and Italy, the sequestration congressional crisis in the U.S., bailout talks in Cyprus and a seemingly overenthusiastic rush into equity mutual funds. The trends led them to put a tactical alert on stock investing over the next one to six months.

Last week, however, they decided that issues in Europe were country-specific rather than systemic, that central banks in the U.S. and Europe will continue their stimulative monetary policies and that investor optimism in the U.S. has cooled enough to guard against hyped-up stock prices that will quickly fall, according to the report.

Even though the S&P 500 index is quickly approaching the all-time high it set in October 2007, investors should take the plunge by reentering the stock market in phases, the strategist wrote.

Investor caution about investing in stocks after two long bear markets in the past 10 years is understandable and "poignant," she wrote, given that investors are sitting on "high cash holdings in spite of several years of decent equity market returns."

The Credit Suisse strategists recommend a phase-in strategy for getting back into the stock market. Rather than plunging in with all their cash, they should use one of three strategies: investing 25 percent every three months for the next year; investing one-third of their cash every six months; or investing 50 percent initially followed by the remainder in two 25 percent allocations over the following six months.

Why is Credit Suisse's brain trust recommending equities NOW? Indeed, the markets are at all in time high in the US, where most investments will doubtless be made. Beyond this, what has changed on the international scene in a month?

It is really incredible that the switch was made because the biggest brains that Credit Suisse can muster decided on second thought that the mess in Europe was not systemic.

Say what?

The European "crisis" stems from something euphemistically known as "sovereign debt." Unpacking this, we discover that big banks lent too much money to insolvent countries.

But this is not a systemic issue?

After Thoughts

Just as Credit Suisse's Financialist publication is a kind of faux representation of a journalism, so Credit Suisse's "recommendations" are really nothing more than equity promotions, and fungible ones subject to pressure from various powerful forces known in aggregate as Money Power.

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