US equity markets can grind higher

Nick Griffin

Nick Griffin

The latest Munro Global Growth Fund report has been released.

In it, chief investment officer Nick Griffin says: “We continue to believe US equity markets can grind higher supported by strong corporate earnings growth, however this requires a normalisation of interest rates without materially slowing the US economy. We are mindful of some recent signs of an increase in wage inflation, however there remains strong structural disinflationary forces, such as technological advancement.

“We are increasingly being asked about the growing performance discrepancy between the US market and the rest of the world (Europe +1.6% and Hong Kong ‐4.1% YTD). While it is tempting to conclude that companies in these regions may therefore be more attractive on a go forward basis, we note that it continues to be the US corporates that are driving the strongest earnings growth, and since stocks ultimately follow earnings, the performance dispersion is warranted.

“Aside from interest rates and inflation, risks to our moderately bullish thesis are: trade tensions (and subsequent economic growth risks); emerging markets weakness (contagion from Turkey, Argentina); and politics (any negatives coming out of the upcoming US mid‐term elections). However, for now at least these issues seem to be contained.”

Read the latest report.

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