LIVE MARKETS-Crossmark Global pegs S&P 500 fair value at 4,850

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CROSSMARK GLOBAL PEGS S&P 500 FAIR VALUE AT 4,850

Over the past week, the S&P 500 index .SPX has gyrated wildly. Indeed, last Monday, the CBOE volatility index .VIX hit 60.13, and although it has since retreated to the low 30 area, uncertainty remains elevated, and price action is especially choppy. The SPX was last just shy of 5,400.

As Bob Doll, chief investment officer at Crossmark Global Investments, sees it, a sustained recovery in stocks beyond occasional bounces hinges on a resolution of trade policy before consumer, business, and investor sentiment is irreparably damaged.

"We remain cautious, with a 4,850 fair value target for the S&P 500, along with a bear case of 4,000 and a bull case of 5,800," writes Doll in his latest "Deliberations."

(The 4,850 fair value target is roughly 10% below current levels).

According to Doll, it's no surprise that the U.S. has been the epicenter of the trade war quake, given that he says its stock market and currency were the most overvalued, and therefore had the greatest downside risk.

That said, he is concerned that a downgrading of corporate earnings will cause a longer lasting bear phase in stocks. This, as he says the Trump Administration's increasingly isolationist bent and desire to remake the global trade system have weakened investor confidence in Treasuries and the dollar as safe havens.

Doll adds that there is even some concern as to whether the dollar's reserve currency status will endure.

In any event, Crossmark expects economic reports to weaken along with cautionary comments by corporations as they release their Q1 results.

Doll's bottom line is that "we are wary of near-term bounces in risk asset markets, as the U.S. and global economic damage from the trade war is still highly uncertain."

(Terence Gabriel)

FOR MONDAY'S EARLIER LIVE MARKETS POSTS:

US TARIFFS COULD REDUCE GLOBAL TRADE BY 5%, WORLD GDP BY 1% - CLICK HERE

U.S. STOCKS RALLY OUT OF THE GATE AS TECH GAINS ON TARIFF REPRIEVE - CLICK HERE

S&P 500 INDEX POISED TO BOUNCE, BUT DEATH CROSS LOOMS - CLICK HERE

DOLLAR WEAKNESS CATCHES SOME OFF GUARD - CLICK HERE

ARE WE OUT OF THE WOODS? - CLICK HERE

EUROPEAN SOFTWARE: A SECTOR IN LIMBO - CLICK HERE

BROAD GAINS LIFT THE STOXX - CLICK HERE

BEFORE THE BELL: TECH CHARGES UP, LVMH KICKS OFF EARNINGS - CLICK HERE

DOING THE TARIFF TWO-STEP - CLICK HERE