Supportive macro backdrop so far makes the case for investing in risky assets, but valuation-wise, harvesting decent returns on a risk-adjusted basis is harder. At least, that’s BofAML’s strategists views.
Despite tight or reasonable valuation, equities still make sense for JPMorgan.
Goldman recommends investors to « remain pro-risk » going into 2018, meaning overweight equities, be neutral on credit and underweight bonds. Continuer la lecture de « Remain Pro-Risk – Goldman Sachs »
« Global earnings look set to deliver double digit growth this year, at 12%, the best since 2010. The strength was broad based, with all the key regions contributing, and largely driven by Cyclicals and commodities. As base effects are turning less favorable, the question is whether earnings will remain a support for equities into 2018. »
This is the opening statement and a rather bullish intro to a report published today by JPMorgan’s strategists Mislav Matejka, Emmanuel Cau, Prabhav Bhadani and Aditi Balachandar. Continuer la lecture de « JPMorgan Expects Double Digit Earnings Growth in 2018 Globally »
2 useful tables from Deutsche Bank that give a view on fundamental trends and valuation ratios for several market places + a deep dive into European markets (geographies/sectors/size).
From Neal McLeod and team at UBS:
« Our base case: a benign growth and policy backdrop…
We’re forecasting global growth to stabilise at 3.8% (China to slow from 6.8% to 6.4%), the export rebound to slow somewhat, inflation to pick up modestly, the Fed to hike rates three times by end 2018 (from now), US Treasury yields to grind higher to 2.7%, Asia ex Japan currencies to be flat (in equity market cap terms) versus the USD and the Yen to weaken to 122.
Continuer la lecture de « UBS Sees MSCI Asia ex-Japan and TOPIX at 790 and 2,100 Respectively End-2018 »
Over the last 8-9 years, financial assets have had a good run, but now valuations look stretch and expected real returns are low. Continuer la lecture de « Where is the Cycle? What Should My Asset Allocation Look Like? »
« House’s view: don’t miss inflation »
This charts illustrates equity drawdowns over history in the US, Japan and Europe.
Per today’s report:
« As equities rallied and bonds sold off, our measure of risk appetite reached a new post-crisis high, but it has started to retreat more recently. Near-term, we think growth optimism will persist and keep risk appetite strong. We are long US equity near-term as it should be a direct beneficiary of growth optimism, but expect optimism to moderate eventually. Later in 2017 we are looking to rotate from S&P 500 to EM (specifically EM-ex-China) where risk appetite has lagged and we expect the growth picture to be more supportive. We also like Europe and Japan on a 12-month horizon in our asset allocation. Both of these lagged global equities in 2016, but should continue to be beneficiaries of reflation and have supportive monetary policy backdrops. »
On a 12 month horizon, GS is overweight Equities, with a bias towards Europe and Japan, but underweight US equities and Neutral on Asia ex-Japan.
The bank underweights Government bonds and is Neutral on credit (yet with a preference for US High Yield and Euro High Yield).
It’s also Overweight Commodities and Cash.
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