Absolute Return Partners examines a world shaped by slowing credit growth, deflation risks, and geopolitical conditions after a seven month publishing hiatus. The piece questions whether QE driven equity gains can persist as Europe weakens, commodity prices slump, and Italy’s debt reaches 145% of GDP.
Six Months of Nothing
Absolute Return Partners
Research
11 Pages
Key Takeaways
Eurozone Deflation Risk: Italy’s debt reached 145% of GDP while euro area credit growth remained negative, raising concerns about prolonged low inflation and weaker equity returns.
Japanese Equity Appeal: Japanese return on equity recovered to all time highs by 2014, yet valuations lagged, leading the authors to favor Japan over fully priced U.S. equities.
Credit Growth Constraint: U.S. credit expanded only 2% annually over five years, while European credit growth stayed negative, pointing toward below average EPS growth and subdued interest rates.
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