Markets Have Yet to See a ‘Deflush,' Strategas' Verrone Says

• Global equity markets are in an uptrend, but a 'deep oversold' or 'capitulative flush' has not been seen yet.
• Central banks are unlikely to tighten into energy shocks; more rate cuts might be discussed if the situation deteriorates.
• Consumer discretionary performance relative to consumer staples is a critical barometer for economic growth perception.
• A potential market rally is expected first, with any significant problems likely to emerge in the summer as cyclical sectors roll over.

Christopher Verrone of Strategas notes that global equity markets are still in uptrends, but a deep 'capitulative flush' has not yet occurred. He believes central banks will not tighten into energy shocks and may even consider more cuts if economic conditions worsen. The market is currently pricing in rates, but growth repricing, particularly in consumer discretionary versus staples, is a key area to watch.