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We Could Be Heading Toward a Confidence Rally

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.

Positioning for the Late Stages of the Bull Market 2017-2018 

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:

A More Positive Storyline for the Market 

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.

Navigating the Near Term for Global Equities 

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.

Setup for 2018 Confidence Rally in Equity Market 

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.

This material is distributed for informational purposes only. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the information mentioned, and while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable.

Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. The views and strategies described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.

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