EPS, valuations & sector rotation

Given the outlook for corporate earnings and Treasuries, we don’t expect the recent partial unwinding of the rotation trade in the US stock market to last. On the contrary, we expect the rotation to resume.
John Higgins Chief Markets Economist
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Asset Allocation Update

Is US households’ cult of equity a bad omen for stocks?

The record allocation of US households (and non-profit organisations) to equites chimes with the broader evidence that the valuation of the US stock market is high by historical standards. With that in mind, while we are not forecasting a crash any time soon, we do anticipate that returns over the next decade will be substantially lower than they have been over the last one.

11 June 2021

Asset Allocation Chart Book

Prospects for risky assets no longer seem as bright

We are still anticipating an extremely rapid recovery in the global economy over the rest of this year. But even so, it has become more difficult to make the case that returns from risky assets across the board will remain very strong, at least in the near term.

10 June 2021

Asset Allocation Update

Outlook for Treasuries still a threat to US equities

Today’s US Employment Report has failed to awaken the Treasury market from its slumber this quarter. We think, however, that long-dated yields will rise again in due course after their surge earlier in 2021.

4 June 2021

More from John Higgins

Asset Allocation Update

We expect a brighter future for Japan’s stock market

Although Japan’s stock market has substantially underperformed its counterparts in the US, UK and euro-zone during the past few months, we don’t expect it to remain a laggard.

28 May 2021

Capital Daily

US corporate bonds versus equities

The relative valuation of stock and corporate bond markets continues to make us doubt that equities in general are in a bubble. It remains very different to the situation before collapses in the US stock market in the late 1920s and early 2000s.

19 May 2021

Asset Allocation Update

We doubt the 10Y UST/Bund spread will keep shrinking

Although the spread between 10-year sovereign bond yields in the US and Germany has narrowed so far during the second quarter of this year, we doubt this will continue for much longer.

19 May 2021
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