The Weekly Strategy Report (24 April 2017)Contributor Multi-Asset Solutions
- The S&P 500 appears set to record its fastest earnings growth rate in 2017 in six years. Non-U.S. equity markets are seeing their consensus growth estimates revised upward. While there are inevitably risks to the consensus, we believe the scope for disappointment is narrower than in recent years.
- Margins could be threatened by a tightening U.S. labor market, but margins do not tend to decline materially until two to three years after the unemployment rate falls below the non-accelerating inflation rate of unemployment (NAIRU).1 Currently, margins are supported by better nominal growth and low corporate borrowing costs.
- Our multi-asset portfolios remain overweight equities vs. bonds and we continue to diversify our equity exposure across the major regions, reflecting a broadening out of economic growth.
EXHIBIT 1: 2017 EPS GROWTH COULD BE THE STRONGEST IN SIX YEARS
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