Analysts start to lower their expectations

When these market indicators lose faith, double dip is possible.

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Stock analysts have long been criticised for getting too cozy with the companies they cover. Historically, most analysts have recommended that investors buy the stocks they review, partly because they like to cover companies they think have good prospects. But the prevalence of "buy" ratings may also be evidence of conflicts of interest. Regulators and commentators have routinely cited cases where analysts were pushed by managers to bestow good ratings to protect the business relationships of their companies. An investment bank underwriting a stock issue, for example, has a clear financial incentive to make sure it gets a vote of confidence from its analysts.

Nowadays, though, even the usually cheery analyst class appears to have taken a more cloudy view than it has in a long time amid renewed fears about a double-dip recession in the US. Fewer than 29 per cent of stock ratings globally are now "buys", according to a Bloomberg analysis - the lowest level of approval since 1997. The problem for many analysts is that while they see plenty of value in stocks as investors continue to shun markets and major western economies grow at a slower pace, they cannot ignore the possibility of a double dip.

"People are sitting on a fence," Paul Zemsky, the head of asset allocation for ING Investment Management in New York, told Bloomberg. "When I go and talk to our equity analysts, they look at the companies and say 'boy these companies look pretty good, earnings are OK, they have plenty of cash. What if there's a double dip'?" Nobody wants to buy into a double dip, of course, and analysts are protecting their hides by sounding a note of caution.

But if even perpetually pleased analysts are becoming bearish, recent fears of another downswing for the global economy might not be unjustified.