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Capturing the Momentum of a Narrowing Earnings Gap
Saturday 31 August 2024
Investment Talks
Capturing the Momentum of a Narrowing Earnings Gap
August 2024 | Since early 2023, a handful of the market's top stocks, including the Magnificent Seven, have surged in earnings and valuation, and have dominated returns. Underneath the surface of today's concentrated, crowded market, sharp earnings recoveries may soon play out and structural changes may occur in many industries, creating new winning and losing stocks. Separating the potential winners from the rest of the market will be key to portfolio success over the next year, and beyond. With so much uncertainty and variability across industries and companies, we believe active management is essential to capturing the momentum of a changing market.
01 | Top stocks including the Magnificent Seven have dominated equity returns since early 2023 as their earnings growth has far outpaced the rest of the market.
02 | We believe many stocks that have outperformed in 2023-2024 are over-owned, and expensive relative to the average stock.
03 | The market is mostly ignoring these changes, potentially presenting a range of opportunities for active investors.
Important Information
Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of May 28, 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.
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Investment Talks
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Investment Talks
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Investment Talks
January 2025 US High Yield Market Outlook & Positioning
Although full year 2024 returns for High Yield were strong and spreads tightened during the fourth quarter, fourth quarter returns were weak with losses in both October and December due to yield curve headwinds. While defaults have moderated over the last few months, Moody’s recently increased its year-end global speculative grade default by issuer forecast to 4.6% on weaker US employment. Moody’s also projects the global default rate by issuer count to decline steadily across 2025, reaching 2.7% by next November.
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