France’s new president, Emmanuel Macron’s party is called En Marche! Which roughly translates as Forward we Go!’ He is not the only one going forward, the Eurozone economy and stock markets have done well this year, and as the first 2 clips of our chart below show, Europe is starting to outpace the US. Global markets generally (as measured by the MSCI World Index) are already up around 10% through Friday’s close, which is roughly what we were expecting for the year. With overseas markets doing slightly better than the US and high yield doing better than the Bloomberg Barclays Aggregate Bond Index, it certainly is tempting to follow the old Wall Street adage and “sell in May and go away”. However, even though some summer volatility would certainly not be a surprise, we maintain an overweight to stocks, especially overseas stocks, and are hopeful that a multi-year bull market is still in its early stages. We believe it is important to remember that the recovery in the Eurozone is only 3 years old, interest rates are zero, and the European and Japanese central banks are still buying bonds and thereby adding to their balance sheets every month.

David Fuller's view

This is a far cry from alarmist forecasts which we see and hear from a number of other US commentators, not to mention self-destructing hedge fund managers.  We know the risks so no complacency here but the super-bears remain contrary indicators.

I think Rod Smyth is right.  Moreover, his views are very much in line with what Eoin and I have been saying.  Rod is a reassuring man to have on one’s side and the number of analysts talking about secular bull markets in equities is certainly not crowded.

Here is a PDF of The Weekly View.