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- Three reasons why the US equity rotation has further to go – CE
Three reasons why the US equity rotation has further to go – CE
FXStreet reports that economists at Capital Economics think that the outlook for the coronavirus, the economy and policy in the US points to a continuation of the rotation currently underway in its stock market.
“We forecast that US economic growth will be exceptionally strong. We are projecting the strongest annual GDP growth since at least the early 1980s, and think that consensus forecasts are still too low. Stronger-than-expected cyclical growth would probably boost the earnings of industries that struggled in the anaemic economic growth and low inflation of the 2010s to a greater extent than those that did relatively well in that period – mostly tech firms whose earnings grew primarily because of structural shifts rather than the economic cycle.”
“We are anticipating further increases in long-term interest rates. We expect the yield to climb above 2% this year. Rising yields have at least coincided with some of the industries hit hardest early in the pandemic doing well recently. So, to the extent that changes in yields do matter, they might support the rotation.”
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