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    • US Economic Outlook Improving

      Our economic outlook is based on a return to growth potential of the global economy, with converging growth rates between developed and emerging countries. Monetary policy is expected to be accommodative, although central banks’ actions will likely not be synchronized. Inflation should also remain contained, with deflation seen as a tail risk event. The current economic environment of low growth, low inflation and loose monetary policies advocates for low volatility and low bond yields. This scenario, coupled with positive expected earnings growth, should be supportive for risky assets.
    • Walking on a Tightrope

      There have been continued concerns that the global economy may be stuck in stagnation or deflation, given both cyclical and structural challenges. That said, we remain relatively positive.
      We expect world GDP to recover as the global output gap is on the way to closing and inflation is picking up. More specifically, we think the recovery in DMs will continue, and while we remain cautious about EMs, we still believe that EMs as a whole can avoid another dip after the slowdown in 2015. This is because we believe central banks (CBs) and other policymakers in major regions will continue to move in the right direction.
    • Downside Risks on the Rise

      Central Bank action is progressively decreasing on the margin and fiscal policy is far from being a powerful ally. Mini-cycles, aggregate demand shortfalls and financial volatility are the main features in the lowlow scenario. We struggle to find triggers that could lift both aggregate demand and supply. Flows and positions are still the main drivers of financial markets as the economic backdrop is mostly priced in at current market levels. In this unprecedented environment, we prefer to move to a substantially neutral view on equities. Selective opportunities in Asia (India, Japan and “New” China).