We Could Be Heading Toward a Confidence Rally
September 27, 2016
The Calamos Global Long/Short team believes the consensus view remains overly pessimistic. Specifically:
- Global GDP growth could surprise positively through 2017-2018.
- The equity malaise of the past year has been driven by an earnings recession that is now ending.
- Improving cyclical fundamentals imply that bond proxies should be avoided.
In “Positioning for the Late Stages of the Bull Market: 2017-2018,” an eight-page commentary published today, Michael Grant elaborates on what has been driving the market, why he sees more optimistic storylines on the horizon and how these considerations influence current positioning.
Here’s a visual summary of the team’s views. The full commentary can be downloaded here.
A More Positive Storyline
The team sees a more normalized storyline in coming years, due to some of the following factors:
Navigating the Near Term
In the near term, investors must grapple with two shifts in the investment landscape; U.S. Politics and the End of Bull Market in Bonds. The team comments on monetary policy, fiscal initiatives and prospects for health care. Troubles in fixed income could include volatility and an inevitable overtightening by the Fed, the team believes.
A Regime Change Implies Sector Positioning is Key
Most investors are not positioned for a “confidence rally” into 2018, but the setup is there. As macro complexity and modest growth continues, rotational trading will be key.
To read the full version of the Global Long/Short team's views on what has been driving the market, why they see more optimistic storylines on the horizon and how these considerations influence sector positioning, click here.