Exane’s macro views for 2015 in a nutshell

Declining commodities prices, lower yield should support economic growth in 2015, says Exane BNP Paribas team.

Here the summary of a report published on Oct. 13:

« Markets are currently selling off on geopolitics and deflation fears

Since the last ECB meeting when Draghi appeared to be backtracking, investors’ concerns about the Eurozone’s economic outlook have weighed on market sentiment. As we said in September, of particular concern are weak EM demand for Germany, the housing market in France shaving off 0.5% of GDP this year and Italy, where signs of credit improvement have been very late.

But weaker oil prices and lower real yields should support the global economy in 2015

As we look into 2015, we maintain our pro-cyclical view of the global economy. The Eurozone should in particular benefit from improved external demand and the depreciation of the Euro. As we highlighted in September, we also see early signs of a 2015 corporate credit recovery. Over the coming weeks, the lack of leading indicators will keep feeding uncertainty on global macro prospects, but around year-end, we expect the Eurozone’s leading economic indicators to improve.

We identify five macro and market trends for 2015 where we have a high conviction

That said, the macro landscape could remain challenging for investors and identifying key trends will remain critical. We have strong convictions on the following trends in 2015: 1) further EUR/USD weakness; 2) low global bond yields (associated with lowflation, especially in the Eurozone), 3) Eurozone corporate credit recovery; 4) German cyclical levy on growth; and 5) French economic changes.

How to make money from these trends in 2015

We have made a number of investment suggestions on how to play these macro and market trends within the European equity space. »

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