The latest macro notes via Credit Suisse say investors should prepare for an environment of low interest rates and low inflation in the USA. The recovery in intact, job growth is returning and equities should be bought on the dips:
Macro: USA set for strong job gains plus low inflation and interest rates; European growth OK but rates risk (e.g. UK); EM rates rising.
Fixed Income: We turn more cautious on long end as economy grows; short and medium maturities still OK. Ebbing sovereign risk, good earnings set to help lower-quality credits.
Equities: Trend remains up; we expect dips to be modest, use to add exposure.
Commodities: Base metals: Up. Gold: Recent setback likely initiates a phase of broad range-trading. Oil: May lose ground as weather boost fades.
Real Estate: Direct commercial real estate still helped by good rentals. Real estate equities: Focus on regions with best growth prospects e.g. Asia.
Forex: EUR/USD supported as rate gap widens, but technicals still neutral. CHF overvalued, turning slowly. JPY: Multi-year bull run ending.
Their favorite trades:
Equity transaction ideas (1–6 months)
BUY S&P 500 index.
BUY Apache, Anadarko, BG Group, CNOOC, Petrobras (ADR), Royal Dutch Shell, Santos, Sasol, Tullow Oil and Weatherford.
Source: Credit Suisse
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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