FXStreet reports that given robust economic growth and earnings, economists at UBS still believe the optimism in equity markets is justified.
“We expect a drag on earnings per share from supply chain problems of just 1% for 2021.”
“We continue to believe the Fed will look through the current spike in inflation. US average inflation data suggests the Fed doesn’t need to act: On two, three, and five-year rolling averages, core PCE inflation remains well below 2%.”
“As the labor market continues to recover we expect yields to rise to 1.8% this year, a gradual increase that has historically been consistent with rising equities.”
“We still expect roughly 30% earnings growth in the third quarter, representing a 5% beat of consensus expectations.”