Investors should look at early positive indicators from the United States as signs of a possible bull market, according to BNY Mellon Asset Management Australia.
Speaking at the CPA Australian self-managed super fund (SMSF) conference and expo, BNY Mellon vice president, intermediary relationships Brigette Leckie said that her view of the current market differs from the ordinary consensus.
“The consensus is for sluggish growth. Where we differ from the consensus is that we think that US growth is going to surprise on the upside,” Ms Leckie said.
“We have clear signs that monetary policy is working, and even with Europe you can see some signs of investment.
“We actually think you are in the next bull market and that you’ve probably been in it for about 18 months.”
Ms Leckie said the critical turning point in the market was capital markets remaining open throughout 2012, despite speed bumps being felt in Europe.
She points to signs of improvement already found in the USA, including a strong rise in the housing sector as indicators of US-led global growth.
“We’re not looking at every single block globally firing on all cylinders; that’s not a bull case,” Ms Leckie said.
“What we don’t want to see is US growth going up to four per cent or higher and Europe suddenly getting re-birthed so to speak and achieving growth of three to four per cent.
“What I’m talking about here is a US-led growth surprise whereby the USA is above where the market is, and with that it combines to uplift to Europe and Japan.”
Ms Leckie said that as a result of a stronger global backdrop, she expects “equities to come back in fashion” and for volatility in the market to slide.
“[This] also means you’re going to see less noise between stocks,” she said.
“If you look at the stock correlations, they’ve been falling and they’re falling because people are more comfortable to go from the macro level to the micro level. They’re looking at grassroots and company fundamentals.”
