Forward Thinking

Latest news and innovations from Oxford Economics

Buy the dip! Market bulls to get a last hurrah as bears sleep on

Posted by Oxford Economics on Feb 13, 2018 11:54:13 AM

As winter turns to spring, around the world investors are anxiously watching the present spasm in global equities and bonds and asking themselves whether the bears of the financial markets are finally waking from a long hibernation.

We think not. To us, a correction of the sort seen in recent days was overdue and a jump in volatility along with this sort of adjustment in equity valuations was just a matter of time. The pretext and triggers were, and remain, less important – stretched valuations in equities often find their own triggers for such an upset.

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Topics: Strategy, Markets, Equity, Equities, Bonds, Equity valuations, Volatility, Earnings

Goldilocks sees off market bears with help of resurgent global growth

Posted by Oxford Economics on Nov 8, 2017 8:30:00 AM

Equity earnings cycles to power ahead – especially in underperforming Europe and EM markets

The world economy is evidently in the midst of what many are calling a synchronised upswing in growth. A strong rebound in manufacturing, led by Europe, appears to be at the heart of the resurgence. And the pace of expansion has accelerated in recent months. This environment is fundamentally conducive to outperformance by assets leveraged to global growth.

Investors have now been uneasy for many months that in some key global equity markets, shares are becoming overvalued, with share prices relative to corporate earnings – P/E ratios ¬– stretched, especially in the United States.

But our analysis concludes that equity earnings cycles, especially in underperforming markets in Europe and emerging markets (EM), should continue to power ahead for some time.

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Topics: Global Economic Model, Global economics, Financial stability, Equity, Global

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