House Call: Talking Equity Markets with UBS Asset Management
At a Glance
The desk is positioning for a favorable outlook on US equities, buoyed by macroeconomic trends and an anticipated earnings growth. Per the full note source, drivers of market performance have included tariff policies, fiscal stimulus, and prospective Fed rate cuts, which have collectively contributed to a year-to-date S&P increase of approximately 14%. With earnings growth expected to accelerate into the low teens by 2026, sentiment appears supportive of equity market momentum despite ongoing concerns about geopolitical tariffs and inflationary pressures. This positive outlook aligns with market consensus amid a lack of major events that could disrupt this trajectory in the immediate term.
Key Takeaways
- 01US equities are buoyed by favorable macroeconomic trends.
- 02Earnings growth is projected to hit low teens by 2026.
- 03No immediate catalysts in the calendar could disrupt market momentum.
Full Analysis
What the desk is arguing
The desk regards the current macroeconomic environment as a significant positive catalyst for US equities, driven primarily by anticipated Fed rate cuts and ongoing fiscal stimuli. With the S&P showing a notable 14% rise year-to-date, the desk echoes sentiments from UBS Asset Management regarding the underlying growth potential reflected in earnings forecasts.
Furthermore, the expectation of around 10% earnings growth for 2025, potentially climbing into the low teens by 2026, underscores the optimism surrounding equity markets. This potential for earnings acceleration is a comforting signal for investors as they consider diversification into value stocks amidst potential volatility from tariff policy effects.
Where it sits in our coverage
Our consensus target for US equities aligns with a broader market expectation of 1.075, encapsulating a range that reflects both bullish and cautious perspectives. Notable firm targets include:
The desk's bullish stance is consistent with other aligned firms, particularly within the higher end of the expected range, suggesting strong confidence in continued equity improvement.
How other firms see it
Firms like jpmorgan and goldman view the equity performance positively, likely aligning with the optimistic forecast shared by UBS Asset Management. Conversely, bofa presents a more cautious stance, with targets of 1.04 reflecting concerns over potential market pullbacks rooted in inflation or tariff impacts.
Market observers should keep an eye on the USD/JPY currency pair as its movements could indicate shifting sentiment regarding US equity performance as the macroeconomic narrative unfolds.
What the calendar says
There are no high-impact events scheduled in the upcoming weeks that may disrupt the current outlook for US equities, enabling market participants to focus on ongoing earnings reports and macroeconomic indicators without immediate external catalysts.
Market Implications
Traders should remain vigilant around the 1.075 level, with ongoing earnings reports likely to reinforce the upward trajectory of US equities. Positioning ahead of potential Fed commentary could also serve as a critical indicator of market sentiment.
From the original
Join Jeff Hans, Senior Portfolio Manager of the House View Equity Portfolios with UBS Asset Management, as he shares a performance update for US equities. We also discuss the impact of Fed rate cuts to US equities, why investors should consider diversifying into value, along with
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