RBS: The US economy to lead recovery through H2 of 2009

According to Bloomberg on November 28, Strategists at Royal Bank of Scotland Group Plc. (RBS) reported that Investors should exploit the “extreme opportunity” presented by stock valuations that have overestimated the extent to which earnings will slump.

While European earnings may decline a further 18 percent, current equity prices suggest the market is predicting a 45 percent drop. U.S. earnings may contract another 15 percent. Risk premia have hit extreme, and unsustainable, highs. The price of European equities relative to trailing earnings may almost double as investors attempt to anticipate the bottom of the recession.

The US economy to lead recovery through the second half of 2009, markets invariably pre- empt economic recovery and we expect equities to rise substantially.

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Sources :

Bloomberg: Global Stocks Will Rally as Prices Hit ‘Extreme’ Lows, RBS Says, November 28, 2008 04:03 EST

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