Moves Under Surface’ Are Growth/Risk Positive for Stocks: GS
European equities down in last few weeks; still, equity risk premium has declined slightly despite fall in prices, Goldman says.
- Highlights ERP decline has offset some yield rise, cyclicals outperformed defensives, small caps outperformed large
- Says risings yields, better growth and inflation expectations are consistent with these moves; expects them to continue
- Euro STOXX 50 remains GS preferred index
- Lifts weighting in autos to overweight vs neutral to add to consumer-facing cyclical tilt as fall in ERP positive for risk-, growth-sensitive areas of mkt (i.e. financials, cyclicals, small caps)