We believe “Fundamentals Drive the Market”. When fundamentals are marching forward, we advocate being fully invested; when they are retreating, we advocate defensive positioning. The “A B C Ds” of market fundamentals are advancing corporate earnings, broadening manufacturing, consumers as the game changer, and developing (emerging) markets as drivers of global growth. Above all, the dominant fundamental is corporate earnings growth, and we demonstrate the prevailing trends in the slides that follow.
Fundamentals Drive the Market
Corporate earnings growth is the barometer for the health of the global economy.
At about 70% of GDP, the U.S. consumer is the game changer in economic growth. Consumption, income and retail sales have achieved all-time highs.
The U.S. manufacturing report has rebounded after a month of contraction; the latest euro zone and emerging markets reports also indicate expansion.