We maintain the narrative and probabilities of our central and alternative scenarios. In our central scenario, equities outperform on the back of abundant liquidity, improving fundamentals and accommodative monetary policy.
Vaccine-resistant virus variants, hawkish policy surprises and geopolitical tensions are the main sources of risks. Beyond 18 months, we expect (US) growth to revert to potential amid a higher inflation regime while stagflationary pressures rise across Europe. As risky assets valuations are stretch, we believe there are narrower margins for a policy mistake or adverse events.
You can now read the full whitepaper at the link below