Citibank analysis team is expecting a significant rebound in the US domestic activity in coming months as they think that the investors are overly-pessimistic regarding the US growth prospects.
Key Quotes
“We are more surprised by the early decision to reduce optionality for potential hikes further out in 2019, when both US and global growth may be more convincingly on a firmer footing.”
“While our outlook for housing remains moderate, we had expected some early-year strength thanks to the drop in interest rates. The bounce higher in existing home sales from 4.93m in Jan to 5.51m in Feb likely contribute positively to Q1 GDP. Such US & global policy steps should stabilize growth, allowing for moderate global growth over year ahead.”
“We see world GDP growth slowing from 2018 pace to just below 3%, with strong contributions from emerging Asia, the focus of our equity overweight. Recession Probability Based on Yield Curve & Bank Lending increased to 34% but still well below 50%.”
“US equities have now rebounded to levels that fully and fairly discount slower, but sustained EPS gains ahead. Non-US equities have rebounded as well, but are still short of levels consistent with a quite similar growth outlook. Non-US equities discount too much slowing.”
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