As every month, find Dorval AM's analysis on their central macro and micro economic scenario sum

  • The macro : the paradox of reassuring global GDP growth with still deteriorating conditions in the industrial sector continues. Renewed trade tensions, if lasting, would reduce the probability of a favorable resolution of this paradox.
  • Valuation : the record low level of bond yields makes some investors believe that equities are cheap, while the high “Shiller P/E” of the S&P 500 leads others to the opposite conclusion. Both arguments are weak. Equity valuation looks normal to us.
  • Market dynamics : equity markets turned very quickly from overbought to oversold. This volatility will not help flows to return into equity funds. Continued outflows have raised the liquidity risk premium on equities, with negative implications for small caps.
  • The micro :after huge dispersions last year, regional EPS growths have converged towards moderate levels. The impact of the trade war on US EPS will surely be negative, but it remains difficult to assess, as most US multinationals.
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