Parker: Beware European drag on earnings

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The original story of Narcissus may be a couple thousand years old now but in the eyes of market strategist Adam Parker at Morgan Stanley, the myth about the boy who falls in love with his own image is about to make a comeback.

“My sense is that we’ve gone a little bit too internal now among U.S. investors,” Parker says in the attached video clip, adding we are so focused on our domestic comeback that we’re ignoring the risks that still exist in Europe and China.

Sure U.S. stocks have rebounded nicely and investors (theoretically) have enjoyed a nice six month run –not to mention a bull market that just entered its fourth year running– but Parker feels this inward focus is about to get a rude awakening.

“We don’t think U.S. companies have sufficiently guided down for the weakening economy in Europe,” Parker warns. He predicts that along with first quarter earnings results in April will be a slew of cautious commentary about the 2nd half due to the bite from a recession in Europe.

“I think you should be betting on the fact you will see more negative guidance from companies with exposure to Europe,” he says.