Bank of America"The key 2020 calendar event is the US presidential election, but we also see several tactical and secular rotations: 1) From bonds to stocks, 2) US to the rest of the world, 3) global to local, 4) trade war to tech war, 5) Growth/Momentum to Value, and more," said Savita Subramanian, the head of US equity and quantitative strategy.
"Our views on broad-based earnings risk and a market that we think is already pricing in the effects of easing trade tensions and monetary policy leaves us reluctant to chase cyclicals after a recent rally, and we think rotational risk works against the crowded growth factor.""While we see plenty to celebrate when it comes to equities we do not believe that US equities are out of the woods just yet," said Francois Trahan, the head of US equity strategy..
"We foresee a small increase for our 2020 mid-cap valuation because mid caps show higher exposure than large caps to smaller manufacturers that often comprise global supply chains." "We retain our defensive overweights — staples and utilities — along with financials for a cyclical hedge that we think is priced appropriately for downside risks.
"As we've discussed in our last few EPS Report Cards, positioning in the US equity market among institutional investors has turned euphoric and highlights the extent to which FOMO has gripped the institutional equity investor community.""In terms of positioning, we are maintaining a mild preference for value over growth for the year as a whole, but think it is a very close call and acknowledge that growth leadership seems likely to persist in the very near-term.
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