Photo: Credit Suisse
From Credit Suisse’s Andrew Garthwaite:We are positive on equities as: 1) economic lead indicators, although beginning to soften, are consistent with reasonable GDP growth forecasts; 2) dovish central banks and synchronised QE are the end game; 3) rising global excess liquidity is consistent with a c10% re-rating; 4) valuations relative to bonds are still attractive; 5) equities remain the hedge if, as we expect, long-term inflation expectations rise; 6) positioning is still cautious.
His note includes a couple of catalysts that could change all that.
On the downside: evidence that corporates are cutting back on hiring and investment amidst political uncertainty in Europe and the US; a hard landing in China; summits in euro area provide no road map to a solution.
For now, Garthwaite’s year-end target for the S&P 500 is 1,440.