There are currently a number of “on the one hand/ on the other hand” factors in the markets:
- Economic growth is reasonably good, but remains under pressure from higher interest rates and higher oil prices.
- Long-term interest rates are reasonably low, but short-term interest rates are rising.
- Profit growth is above average, but is decelerating.
- Productivity is strong, but is slowing.
- Corporate balance sheets are healthy, but are threatened by the high current account deficit.
- Stocks are attractively valued compared to bonds, but are not cheap by historical measures.
Schroders Economic Research, October 2005
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