- Corporate earnings in 2019: A fading momentum is in store!
Corporate earnings in 2019: A fading momentum is in store!
Tuesday 23 October 2018
Research / Market
After two years of strong earnings momentum, EPS growth is expected to decline considerably from 2019.
Between global growth reaching its climax, the fading impact of US tax reform, the declining contribution of oil and commodities and the rising wage costs and tariffs, the consensus is likely to be negatively surprised.
MSCI ACWI EPS growth which amounted to +17% in 2017 and is estimated at +16% in 2018, could fall to +7% in 2019, instead of +10% expected by the IBES consensus.
Although it is unlikely that market PE will rise in the latter part of the cycle, the prospect of a downgrading of consensus figures could weigh on the equity markets.
Bavarian elections: Eropean political landscape continues to evolve
"The poor performances from the traditional parties in the Bavarian elections represent early signs of a political reshuffle at the federal level."
Brazilian elections: lights and shadows on the horizon
"The expected outcome of the presidential election occurred, with right-wing candidate Jair Bolsonaro (PSL) winning vs the leftist Fernando Haddad (PT)."
Asset class return forecasts - Q4 - 2018
We stick to the view that 2018 will be the peak of the global economic cycle. 2019 will most likely be a year of deceleration albeit with still above trend growth, before a further slowdown of growth towards potential in 2020.