Portfolio Manager Survey Results

05/03/10 -

• 785 '10 year-end R2000 price target – 9.5% upside.  Small-caps are fairly valued.
• Consumer Discretionary skepticism remains high.
• Small-caps will outperform large-caps in 2H'10 as sentiment remains bullish.
• ‘10 earnings remain underappreciated – respondents have proved accurate in the past.
• Industrials & Tech expected to outperform in 2H’10; Utilities and Consumer Discretionary are expected to underperform.  Consensus remains mixed on Financials with 48% expecting small-cap banks to outperform vs. 36% underperform.
• The Fed won't start raising rates until 1Q11 though will end its quantitative easing (QE) by this quarter or next with US 10-year yields rising only modestly once QE ends.
• 58% believe commercial real estate woes are discounted up from 55% in Jan '10.  77% believe residential real estate woes are mostly priced in up from 69% in Jan ‘10.
• Consumer spending expected to rise modestly year-over-year though 45% now expect strong consumer spending growth versus only 10% in our Jan ’10 survey.  Investors are undecided as to whether consumer deleveraging is finished.