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Trade gloom tempers the US earnings boom

US earnings growth appears on track for another bumper quarter supported by solid economic fundamentals. Early reporters have beaten expectations and we expect another quarter with more than 20% S&P 500 EPS growth. But trade tensions continue to escalate and additional tit-for-tat tariff increases can’t be excluded – a risk that does not appear to be priced into US stocks.

Tariff traffic

During the recent US Presidential visit to London, I was stuck in traffic that seemed to be the “highest level of special.” I asked my taxi driver if this was caused by construction, tourism, or the city taking to the streets for an event. The sardonic reply came: “Construction, tourism, Brexit, Trump — take your pick today, sir.” For me, that traffic jam encapsulated a lot of the good and the bad impacting global markets. Yes, earnings and economic growth on the whole are strong,* but political issues are so often in view.

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Questions we're tracking

Each month we will answer five of the top questions on investors' minds and on our minds as we determine our House View positioning.

Thematic spotlight

Enabling technologies, including artificial intelligence, augmented reality/virtual reality, big data, cloud computing, and 5G, now represent about a mid-teens share of overall global IT spending.

Key topics

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