The Global Cycle Has Further To Run

News this past week:

Stock graph
• Oil prices rose 2% on the week with Brent at USD 53.9
• Gold rose 1.9 % to 1347, its third week of gains
• Risk appetite returns as treasuries retreat, stocks advance
• Apple set to launch the iPhone 8 and X models this week
• Hurricane Irma devastates the Caribbean and Florida

Andrew Hardy (CFA) of Momentum Global Investment Management shares his view:

Despite nervousness around North Korean brinksmanship, devastating hurricanes, and the approaching US debt ceiling, global equity markets produced their tenth consecutive positive return last month, the longest run of gains in over thirty years. The MSCI World index has delivered a total return of 15.4% in local currency terms over that period and has risen by over 230% since the lows of March 2009. The US has been the strongest performing market over this period, gaining 337%, making it the third largest US bull market in history. Equity valuation levels are high, including the popular cyclically adjusted Shiller PE measure which has climbed to a level of 30, a multiple of earnings that was only surpassed briefly during 1929 and for several years during the dot com bubble. With statistics like these it is easy to draw a bearish conclusion; that equities are expensive and this bull market is on its last legs. However, our view is that this current cycle is sustainable and still has further to run. Several factors lead us to this conclusion.

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