--> this is the note mentionned in the ZeroHedge Article in my earlier bbg, "US equity market to underweight relative to other equity markets over 3 months following strong performance" (Page 4)
We believe there will be a sustained acceleration in US and European growth in the first half of the year. This and the related upward pressure on real bond yields are likely to shape the strategic landscape. We expect US unemployment to reach the Fed’s 6.5% unemployment threshold by the 3rd quarter. This together with above-trend growth increases the risk that investors will question the prevailing outlook for rates to be unchanged for a long period of time. We therefore see the risk to other assets from higher rates this year as somewhat back-end loaded.
Our views across asset classes
Equities: We remain overweight over 3 and 12 months with higher conviction over 12 months. Returns should be supported by better global growth, healthy earnings growth and still high risk premia, in our view.
Commodities: We are neutral over 3 months as geopolitical uncertainty for oil markets remains high. We stay underweight over 12 months, where we see significant downside potential for gold, copper and soybeans and downside risks from supply to our relatively benign price forecast for oil.
Corporate credit: We expect the search-for-yield environment to remain strong and push spreads a bit tighter from here. Corporate re-leveraging remains the main risk to credit quality, in our view. Within credit, we prefer high yield over investment grade. We stay neutral on the asset class.
Government bonds: The steep yield curve should offer some protection against a significant further rise in 10 year yields in the near term and we stay neutral over 3 months. Longer term, we continue to expect yields torise as growth improves. We remain underweight over 12 months.