Wouter Sturkenboom

The two key global market trends of early 2018 - U.S. growth leadership and the U.S. dollar bounce - have probably run their course. Be alert for an escalation in the trade-war issue, and keep an eye on the yield curve for a U.S. recession warning, although a recession seems unlikely before late 2019.

Our central view is that equity markets can push higher before facing headwinds later in 2018 as markets factor in rising risks of a 2019 recession. Running with the bulls can be dangerous. It’s easy to get swept up in the elation of the crowd and underestimate the risks.

We’re in a late-cycle, momentum-driven market, where valuation is at an extreme. Momentum can drive markets beyond fundamentals for an extended period. No investment process is going to pick the peak in the cycle, but we’d lean out as the risks increase.

We’re in a late-cycle, momentum-driven market, where valuation is at an extreme. Momentum can drive markets beyond fundamentals for an extended period. No investment process is going to pick the peak in the cycle, but we’d lean out as the risks increase.