We continue to believe that global equities will advance further before the next US recession strikes:
1) Our call remains that one should not expect a US recession over the next 12 months.
2) Fed will keep easing, but without HY spreads or jobless claims spiking, both of which typically deteriorate into a recession.
3) Consensus now projects lower EPS growth rate in 2H than what was delivered in 1H –this is historically unusual and might end up too conservative
4) Equity P/Es are undemanding, with MXWO at 15.7x fwd. P/E, in line with historical average. Typically, equities rerate to a premium at the cycle peak
5) Bull-Bear is subdued again, which is a good contrarian indicator