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February 22, 2010 - ,

Investment Strategy – February 2010: Growth will be slow from its current strong place

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An extract of the February 2010 edition of Investment Strategy

Growth will be slow from its current strong place

Although there can be no doubt that economic activity and manufacturing in particular have recently accelerated, this solid growth is likely to end in the second or third quarter of this year. Thereafter, growth is likely to slow in the developed countries and return to a level that is more in line with final demand. Dynamic growth in the emerging countries will keep the global economy on solid ground.

Fundamentals still favourable to riskier assets…

All things considered, we expect conditions for the rest of the year to be fairly favourable for equities, as economic growth should support corporate revenues, interest rates are low and earnings are rising rapidly, whereas valuations still seem to be reasonable.

… despite volatility

In other words, this investor worry—and prior to this concerns about how the “Volcker rules” might affect the US banking system and China’s efforts to restrict credit growth—currently seems to be simply an excuse for profit-taking and/or speculative attacks.

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