Earnings

Global risk assets are engulfed in a wave of euphoria, which is pulling Europe higher along the way. However, risks still abound. How should investors adjust their allocation to Europe under these highly uncertain conditions?
 

This week, our three screeners show you how to setup easy monitoring of the BCA Score, take advantage of earnings season in the US, and seek out global stocks that are cheap and high quality.

Banks have had an amazing run, and while such strong performance is unlikely to repeat, there is still oomph left in the trade thanks to a more favorable regulatory environment, stronger demand for loans, a steeper yield curve, and a strong pipeline of capital market activity. Key risks are further tightening of monetary policy and an increase in bad loans. We reiterate our overweight on Capital Markets, Diversified Banks, and Regional Banks. 

In this first presentation of 2025, we start with an overview of the 2025 outlook webcast polls, and a brief post-mortem of the 2024 market performance. Then, we shift gears and examine what is behind the recent surge in bond yields and its implications for equities. We also review market technicals and positioning and conclude with a list of trades to prepare our portfolio for continued moves in yields.

Trump's policies aim to support domestic producers and will be pro-growth and inflationary, at least initially. This environment is supportive of equities. Earnings will likely be strong, but elevated valuations make equities prone to a correction. Earnings growth broadening will translate into performance broadening – the S&P 493, Cyclicals, Value, Small and Mid are likely to outperform.