A SILEX Equity podcast by Barthélémy Debray, Head of Equities at SILEX - 

Recorded: 06/04/2021 - 

Transcript: Hi everyone, my name is Bart. I'm the head of equities at SILEX. And the topic of the podcast today is our outlook for equity markets in the coming weeks. We've had multiple requests and questions from investors about what we think could drive markets up or down in the coming weeks. And that's precisely the main point about current markets. There are no obvious catalysts, either on the way up or on the way down. The Q1 reporting season was a complete home run for tech stocks as well as for cyclicals. But it's now in the rear mirror, which now begs the questions, have we reached peak growth? And if yes, what more could drive markets up?

The answer is clear. Not much, at least in the short term. Q1 has delivered 11.5% sales growth and 50% EPS growth in the US. It's a massive 20% upside surprise compared to consensus estimates. And obviously the issue going forward is whether the US story is now past peak growth, especially as we enter the second half of the year and we're facing a potential tax headwind going into 2022.

Despite this blowout earning season, the price action across the board has been a bit disappointing, perhaps illustrating that investors have already begun to price in a slowdown in EPS growth as we move through 2021.

But at the same time, what could drive markets down? Well, there is no major catalyst on the way down either. So it seems that in the absence of any positive and negative catalyst, the market will be driven by flows, by seasonality, by technicals in the short term. And that's never a good thing, especially because we know that May is not very positive in terms of seasonality. So we could have a bit of a drawdown potentially in the coming weeks. That being said, we would expect any drawdown to be temporary. We would expect investors to use any potential drawdown to redeploy their cash. There is a lot of liquidity in the system and that should support the market in the midterm. Thanks again for listening. And we will come back very soon with new podcasts. Thank you. Bye-bye.

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