Author Archive

The US tax bill will boost 2018 earnings forecasts

Last night, the US Senate approved the tax bill. It has since returned to the House of Representatives for administrative reasons, but, in line with an earlier vote, a green light looks now highly likely. Shortly thereafter, President Trump should sign it formally into law. If the tax reform is adopted, the statutory tax rate […]

Developed-market equities continue to price hard data

The momentum behind hard macro data is improving investors’ visibility on corporate profit growth in developed markets (DM), which we expect to be the main market risk factor driving equity markets over 2018. According to our analysis, 96% of year-to-date returns of the Stoxx Europe 600 have been due to earnings growth and 59% of […]

The BoJ’s ETF purchases mark a major shift for Japanese equity market

Although it has made no major monetary policy announcement since September 2016, the Bank of Japan (BoJ) has actually been tapering its government bond purchases ever since. As a result, equity ETF purchases have steadily increased over the past year from 3% of total BoJ purchases to 9% recently, above the initial implicit target of […]

High equity valuations leave no room for disappointment

Our core scenario for global equities for the next 18 months is built on three active risk factors (drivers): earnings growth, valuations and currency fluctuations. Of the three, earnings growth will be the most significant for return generation. After two strong quarterly reporting seasons, the positive base effect that boosted earnings growth in Europe in […]

Positive margin dynamics, but stretched equity valuations

The Q2 2017 reporting season demonstrated that corporate results dynamics remain robust across developed economies. Sales and profit figures came in well above estimates in the US, Europe and Japan. The trend for profit growth has sustained equity markets’ total returns in the year to date. But due to the weakness of the US currency, […]

Resilient earnings growth across all regions

Corporate earnings growth for Q1 2017 surprised positively across major economies. Among the key trends of this earnings season has been the synchronisation not only of the macroeconomic cycle, but also the earnings cycle. Indeed, all markets exhibited strong trends in corporate profit growth. In particular, Japan and Europe provided significant positive surprises. The strong […]

Profit dynamics support further upside for equity markets

Our 2017 scenario, drawn up last December, called for a total annual return of 10% for global equities this year. We attributed the bulk of this performance to a double-digit rise in estimated corporate profits. As the Q4 2016 reporting season draws to a close, 2017 earnings expectations are proving resilient or are being revised […]

Equity total returns could reach double digits in 2017

Major equity markets are likely to deliver a total return of around 10% in 2017 according to our risk factor-based analysis framework. This projection is contingent on two market risk factors, i.e. equity and interest rates. We use four building blocks in our calculation of projected equity returns: dividend yield, buyback yield, valuation and earnings […]

Arbitraging between equity investment strategies

The US Value equity strategy’s outperformance has accelerated since the US elections on November 8. Over the 15 trading days following the elections, our Value index returned 9.8% (in US dollars), compared with 8.2% during the preceding six months. Current economic and equity market dynamics reveal an opportunity to arbitrage between two distinct equity investment strategies: […]

Our site and the information it contains is not intended to US citizens, US residents, Canadian citizens or Canadian residents.

I am not a US citizen, US resident, Canadian citizen and/or Canadian resident
I am a US citizen, US resident, Canadian citizen and/or Canadian resident