Global markets are beginning to digest the stretched valuations, high yields and strong currency ahead of the US Fed meeting. The aggregate policy outlook from the new administration is expected to push up inflation and debt in the process of raising growth. The inflation rally since October has been running on better than expected US and China economic data, US Fed rate cycle expectations and potential fiscal stimulus in the US. The market will soon move from optimism to execution risk with a rising interest rate outlook. We have seen a rotation out of growth industrials and into financials and resources during the recent rally. As the growth benchmark rises with interest rates, we expect the market to return to small cap industrials as the large cap growth outlook is capped by weak economic growth. We expect to see a higher level of macro volatility in 2017 due to US/China growth and EU breakup risks. Preferred GARY picks are... (VIEW LINK)
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