Pimco's Erin Browne Believes Robust Earnings Are Helping Equities But Complacency Exists

Pimco multi-asset strategies portfolio manager Erin Browne reportedly said robust earnings are helping boost equities but there's a lot of complacency in the market.

"When you look at earnings, they’ve still been fairly robust. Certainly, we are off the highs that we saw in the post-pandemic period and we had earnings decline slightly over the last two quarters. But still, earnings are quite robust and the guidance from companies at least is still suggesting that there’s decent strong demand ahead," she told Bloomberg TV.

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Browne observed equities are grinding higher as the market’s waiting for the recession which looks to be knocking on the doorsteps of investors but hasn’t yet hit.

U.S. markets have been trading in the flat zone over the last two days after investors and traders weighed in on a mixed set of corporate earnings. The SPDR S&P 500 ETF Trust SPY closed 0.017% lower on Wednesday while the Invesco QQQ Trust Series 1 QQQ lost 0.047%.

Complacency: The portfolio manager noted there are a lot of complacencies when one looks at equities and reiterated her view that a disconnect exists between bonds and equities.

"The bond market is telling you that there are risks that are starting to percolate, that you are starting to see an economic slowdown, inflation’s falling but it’s still going to remain high,” she said. 

“Equities, on the other hand, are operating in absence of any risks on the horizon. I think that that disconnect between stocks and bonds right now is telling you a story that you know equities really should be a little bit more cautious as we move into the second half of this year," she added.

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