Behind the Numbers, with Sam Stovall

Sam Stovall, S&P's chief economic strategist, has maintained a high percentage of assets allocated to stocks this month. Within that percentage, Stovall recommends underweighting U.S. equities while overweighting international equities because he sees the next Fed action to be a rate cut. "We believe the Fed will do this in the first quarter of 2008," he notes. "We also think that, internationally, earnings are expected to grow more rapidly overseas than domestically, and valuations appear to look more appealing to us overseas than at home." Stovall points to seasonal considerations as a risk to his forecast. "The summertime is usually a weak period for stocks," he says. "The third quarter, in particular."