Bruce Murray's Top Picks: Raytheon Technologies, BMW, Mastercard BNN Bloomberg MARKET OUTLOOK:
We are in the early stages of a very powerful economic recovery with GDP growth rates forecast to be over 4 per cent next year in both the U.S. and Europe. Consensus market EPS is very low at around 7 per cent. This should easily be beaten if GDP forecasts are right, as economies of scale will increase earnings as we get through industrial shortages and volumes increase. This should also cool the current inflation concerns. Market gains over the past 12 months reflect strong earnings and P/E ratios were largely unchanged. The forward P/E sits at around 20X. Stocks are cheap compared to bonds and perhaps even real estate. There is still over a US$1 trillion in money market funds, a lot of which could enter the market. The Biden infrastructure spend will also insulate the economy from a downturn. So, we remain very constructive on the outlook for stocks.
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