Global Equities to Trend Higher
Although a short-term correction is likely, the current reflationary window should provide a tailwind for global equities in 2017.
We expect global equities to be higher in 12 months than they are today. However, the risks for stocks are tilted to the downside over both a shorter term horizon of lesser than two months and a longer-term horizon exceeding two years.
The near-term outlook is complicated by the fact that global equities are overbought, and hence vulnerable to a selloff. Our bullish sentiment indicator is stretched to the upside. Expectations of long-term US earnings growth have also jumped to over 12%, something that strikes us as rather fanciful. Renewed rumblings in China could also spook the markets for a while.
We expect global equities to correct 5-10% from current levels, setting the stage for a more durable recovery. Once that recovery begins, higher-beta developed markets such as Japan and Europe should outperform the US.
Read more at BCA Research
About BCA Research
BCA Research Archive
|02/17/2017||The Reflationary Window: Open How Wide For How Long?||story|
|02/16/2017||Trump and the Fed||story|
|01/27/2017||The "IF" Rally May Be Unraveling||story|
|01/18/2017||US Banks: Higher Rates Vs. Weaker Loan Growth||story|
|01/12/2017||The 2017 Outlook: Shifting Regimes||story|
|12/02/2016||Catalysts for Higher Global Bond Yields||story|
|11/23/2016||Dollar Strength Warrants Caution On U.S. Equities||story|
|10/31/2016||Trouble Ahead for USD-Denominated Sovereign Debt?||story|
|10/24/2016||EM Reflation Confirming Indicator Raises a Red Flag||story|