Unreal these fundie predictions are. Citi Global telling their clients to keep buying and CitiFX talking of a DOW crash scenario. Probably CitiFX decisions are based on astrologer recommendations or planet alignments.
By Jeremy Gaunt, European Investment Correspondent
LONDON (Reuters) - Wealth managers at Citi are telling their clients they should be fully overweight in equities, seeing current equity market losses as temporary.
They also suggest steering clear of fixed income and taking a neutral stance with hedge funds.
In its September outlook, the U.S. firm's private banking and wealth management arm said it expected further volatility from markets as a result of global worries about credit drying up. But this was a short-term view.
"We believe that the long-term bull market is still in place and that this is not a full-blown credit crunch," wrote Georgia Bush of Citi Global Wealth Management Investments.
"Rather credit levels have started to normalise from unprecedented tight levels, and a period of exceptionally loose lending requirements may be nearing an end."
Bush said corporate balance sheets remain flush with cash -- meaning the higher-rated among them are not dependent on debt markets for capital expenditure and the like. Earnings are also holding up.
Within the equity sector, the wealth managers are bullish on U.S. large caps such as those in the S&P 500 index <.SPX> and on Europe. They expect significantly higher returns over 12 months than the long-term trend.
They are neutral on other regions and sector, such as Japan, U.S. small caps and emerging markets.
By contrast, they recommend a fully underweight exposure to fixed income. They are neutral on U.S. Treasuries and high-grade corporate debt, within this stance, and bearish about everything else.
This comes despite a view that the pressure on central banks to tighten monetary policy may have eased.
The current outlook suggests that the U.S. Federal Reserve could lower rates from 5.25 percent while the Bank of Japan, European Central Bank and Bank of England could defer plans to hike.
"Global growth is solid and corporate balance sheets remain in good shape, which should allow for a return to orderly markets," fixed income wealth managers wrote, suggesting that the current flight to safety should be temporary.
Citi wealth managers are neutral on major currencies versus the dollar, expecting it to strengthen modestly over the next few months.
They are neutral on other regions and sector, such as Japan, U.S. small caps and emerging markets.
By contrast, they recommend a fully underweight exposure to fixed income. They are neutral on U.S. Treasuries and high-grade corporate debt, within this stance, and bearish about everything else.
This comes despite a view that the pressure on central banks to tighten monetary policy may have eased.
The current outlook suggests that the U.S. Federal Reserve could lower rates from 5.25 percent while the Bank of Japan, European Central Bank and Bank of England could defer plans to hike.
"Global growth is solid and corporate balance sheets remain in good shape, which should allow for a return to orderly markets," fixed income wealth managers wrote, suggesting that the current flight to safety should be temporary.
Citi wealth managers are neutral on major currencies versus the dollar, expecting it to strengthen modestly over the next few months.
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