Yes, we expect US small-cap equities will outperform US large-cap equities this year. Our view is based on the belief that the large valuation spread that exists will likely narrow and that large company earnings are likely more at risk of missing expectations than small company earnings. To overweight small-cap equities, we recommend funding it from […]
February 2023
Yes, it is likely that the “softish landing” implied by forward consensus earnings expectations will fail to transpire. In contrast, we anticipate a recession, given the decline in leading economic indicators and our view that the Federal Reserve will not be quick to cut rates to support activity. After adjusting downward in recent weeks, consensus […]
January 2023
We expect global earnings growth will be below average next year, as prior interest rate hikes increasingly bite. With this backdrop, we expect value equities will outperform, Chinese equity underperformance will correct, and Healthcare may present an overweight opportunity. Global Earnings Growth Will Be Below Average in 2023 Kevin Rosenbaum, Global Head of Capital Markets […]
December 2022
No. Despite the recent spate of lockdowns in China, we still anticipate some form of easing of the current zero-COVID policy and increased support for the economy following the Party Congress in October. This will ultimately drive a rebound in the Chinese economy and allow Chinese equities to outperform global equities. While the timing and […]
September 2022
US small-cap stocks have underperformed large-cap peers in recent years, opening a significant valuation discount that seems hard to justify based on relative earnings strength or balance sheet health. Looking ahead, the sector exposure of small-cap stocks may make them better positioned for the current environment of rising interest rates and high commodity prices. While […]
June 2022
Yes, we think corporate earnings expectations are likely too high. This is because earnings are well above the long-term trend, and we expect inflation and higher policy rates will put downward pressure on profits margins. After growing by more than 50% in 2021, global corporate earnings are significantly higher than the long-term trend. However, nominal […]
June 2022
We don’t think so, as the markets are pricing in more severe conditions than we believe are warranted. The MSCI China Index, which tracks Chinese stocks listed in both Hong Kong and the United States, has sold off sharply thus far in March and is down roughly 25% year-to-date, and over 50% from its February […]
March 2022
Global equities have returned more to investors than high-quality global bonds in nearly three quarters of the last 30 years. The margin of outperformance during those years has been considerable, averaging 12.5 percentage points. That high historical success rate, along with our view that healthy economic activity will support both positive earnings growth and risk appetite, leads us to expect that equities will yet again outperform high-quality bonds.
December 2021