BANGALORE (Reuters)-equity markets in the US could receive a boost in the second half of this year of a strengthening of the labour market, but a further rise in oil prices could hinder a recovery, a top equity strategist at JP Morgan Securities said.
"If oil goes to $ 200, it is a serious, serious threat to a thesis because it is a level that really a recovery is in danger like that about $ 6 per gallon for gasoline would translate," said JP Morgan chief U.S. equity strategist Thomas Lee Reuters by phone from New York.
Unrest and violence in North Africa and the Middle East and the growth of the strong demand in Asia have pushed oil prices to their highest since 2008, triggering a series of warnings of consumers and producers that precious oil would be detrimental to economic growthin turn, undermines demand for fuels.
The effects of the current price levels of high oil prices on the global economy is not as important as that seen in 2008--a period in which significant falls in house prices, payrolls and equity prices, said Lee, a veteran wireless services industry analyst.
Unlike 2008, house prices are today much more stable, with stock prices rise amid higher payroll numbers, Lee noted.
"So, I think that major shifts to why oil not caused profits to weaken or households to collapse," said Lee, who in 2009 one of the most remarkable predictions for the default & arms of 500 index created.
Lee, who a year-end goal of 1425 for the S P 500 index has &, believes a stronger impact of oil prices and the recent disaster in Japan will not seen until the second quarter.
"From talks with all companies, it doesn't seem like Japan's supply chain effect is to be seen until the second quarter because of the way for Council acts as a buffer," he said.
While some industries, such as technology and aerospace, may be suffering from the effects of the earthquake in Japan last month, said the problem of Japan is a short term care or a "a quarter of a miracle," Lee, who also serves as the macro small and mid-cap equity strategist at JP Morgan.
Lee expects the S P 500 companies & to items in the profit of $ 23 per share in the second quarter, and $ 96.50 per share in 2011.
SECTOR PICKS
The strategist who optimistic on us stock markets for the rest of the year, recommends investors own financials, industrials and technology companies.
"Our view is that it's still a bull market that is dominated by cyclical ... but I think that sometime in the summer, we're going to end up upgrading, healthcare and staples because even in bull markets, defensive groups 40 percent of the time could allow" Lee, a former Director of Salomon Smith Barney, said.
Lee, an alumnus of the Wharton School at the University of Pennsylvania, views "underweight"-appreciated utilities such as less attractive in the current environment.
The index S & P 500 was trading 0.86 percent at 1346.79 in late afternoon trading on Tuesday.
U.S. crude for June fell 33 cents to $ 111.95 1944 GMT on Tuesday. Although Tuesday the intraday peak of $ 112.64, achieved U.S. crude was $ 113.48 on Monday, the highest intraday price since September 2008, before ending the day at 1 penny.
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