When contrarian becomes consensus...Many investors have flocked to emerging market (EM) and European equities this year, as money has broadly flowed back into risk assets. Our analysis suggests these equity trades are becoming consensus, and EM and European stocks are no longer the contrarian trades that they were for much of 2016.
Emerging market (EM) and European equities are becoming consensus trades, but we believe they still have room to run.
Equity markets traded modestly higher last week. Momentum and low volatility factors outperformed as bond yields declined.
We expect the tone of this week’s European Central Bank (ECB) meeting to be dovish, after recent weak eurozone inflation data.