US strategist suggests caution in the markets

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James Swanson, Chief Investment Strategist at US-based MFS, which manages $418b US, says he’s feeling cautious about markets in the month ahead, and suggests that investors with new money “may want to contemplate standing aside for now.” So why’s he so concerned? “By now, I would have expected sales and profits to have rebounded, with consumers responding to the "energy dividend" that has accompanied the tumble in oil prices. And the pass-through from lower input costs should have driven an increase in overall economic activity, fueled by higher real consumer incomes. That has not yet happened. I find it both discouraging and an ominous sign for risk assets.” He also highlights the high price of the S&P 500, geopolitical risks and deteriorating macro data. “And most importantly, the profit share of gross domestic product, one of the most important forward indicators I follow, has started to slide. For now, it might make sense to take a step back.” Read his full outlook: (VIEW LINK)


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