26 May 2016: The bottom line
– Many investors believe there are few attractive investment opportunities in markets at the moment, and there is a wide divergence of views on which assets will perform well or badly.
– Low investor confidence is partly due to heightened political risk. Earnings setbacks in the US, Eurozone, and Japan have contributed to this caution.
– Despite challenges, we expect a pick-up in earnings growth in the US to support equities, while an easing of financial conditions will underpin euro-denominated high yield credit.
– We have closed our underweight Australian dollar position relative to the Canadian dollar. The Canadian economy may have slowed due to the effects of recent wildfires. We remain underweight the Aussie versus the US dollar.