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BofAML: estrategia de renta variable post Brexit & situación económica Gran Bretaña
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    <strong>Artículo publicado en <a href="http://www.lacartadelbolsa.com">La Carta de la Bolsa</a> el Martes, 26 de Julio en la sección: Al Día</strong>
    <h3 class="titulo_articulo">BofAML: estrategia de renta variable post Brexit & situación económica Gran Bretaña</h3>
    Redacción
    <p><a href="http://rsch.baml.com/r?q=NzGVPq9UZYnvb7Rv3h3zTQ&e=presthaya.fixter%40baml.com&h=u8p8AQ" target="_blank">Strategy Insights: What happened to the Brexit sell off?</a><br />
•   Markets have rebounded post Brexit on better economic data, easier central banks and defensive positioning.<br />
•   Brexit contagion hasn't happen but we are still concerned about impact on growth. We see risk/reward on markets as balanced.<br />
•   We have neutralised Financials given positioning and our market outlook. Investors should be long yield and long EM exposure.</p>
    <p><strong>Market rebound on positioning and data leaves us neutral</strong></p>

<p>We and many others thought there would be a bigger fallout from Brexit. The selloff in markets ran into central banks taking an easier policy stance, better data out of the US and China and perhaps most importantly defensive positioning from investors. The FMS shows cash levels at 15 year highs and protection taken out by investors at new highs. In contrast markets have had a strong run though and some are looking technically a bit stretched. Overall we think risk reward around markets is now evenly balanced.</p>

<p><strong>Brexit still has downside risks</strong></p>

<p>That is not to say the risks have all gone. The survey data out of the UK has been uniformly negative since Brexit. We will have more of an idea when the advance PMIs are published for the UK and Euro Area on Friday. How big a hit to growth there is remains open to question but the IMF did downgrade its global GDP forecast on Brexit.</p>

<p><strong>But growth elsewhere has surprised on the upside</strong></p>

<p>Of course the UK is only the world's 5<sup>th</sup> (perhaps now 6<sup>th</sup>) biggest economy and the data out of the US has been robust, not just payrolls but crucially the ISM releases. This points to a better H2 for the US. Equally Chinese data has been sufficiently robust to encourage our economists to lower their expectations for future rate cuts. The lack of contagion from Brexit means we can feel more comfortable about global growth.</p>

<p><strong>Progress on Italy crucial for European equity markets</strong></p>

<p>If there is one other fallout from Brexit to be concerned about it is Italy. The Italian banking system needs to be sorted out and while a deal for MPS looks likely it is unclear whether a broader bailout can be agreed without impacting creditors. A resolution may well be crucial to Mr Renzi's chances of winning the Autumn referendum. It would also be a significant positive for a beaten up banking sector.</p>

<p><strong>We move financials to neutral but stay long yield and EM</strong></p>

<p>The Stoxx 600 has now underperformed the S&P 500 by 13% ytd. It trades on 14.9x vs 17.1 times consensus estimated 12-month earnings. Perhaps that is enough. If risk/reward around markets is more broadly balanced then we want to rebalance our portfolio further too. We move Financials back to neutral by trimming our defensive overweight from 450bp to 250bp. Yield and EM exposure over expensive defensives and domestic UK is our core position.</p>

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						<p>UK Economic Watch: Recession, stagnation or recovery? Tracking Brexit fall-out</p>
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						<p><strong>Global Research Media Relations</strong></p>
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			<p>Refer to important disclosures at the end of this report <strong>(see link below).</strong> Please note, you may quote directly from this research report solely in your reporting as a member of the media; however all quotes must be cited as having come from a <strong>BofA Merrill Lynch Global Research</strong> report. All other copying, redistribution, retransmission, republication and any other unauthorized dissemination or use of the contents of the report or the link thereto are prohibited. If you are interested in interviewing an analyst, your request must be directed to Research Communications & Media Relations.</p>
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			<p>UK Economic Watch</p>
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<p><a href="http://rsch.baml.com/r?q=DEWcAo5EoLbVo6SEQtxt2g&e=presthaya.fixter%40baml.com&h=ZveVoA" target="_blank"><img src="https://mail.google.com/mail/u/0/?ui=2&ik=ad04113e64&view=fimg&th=1560d852c26acb4a&attid=0.0.1&disp=emb&attbid=ANGjdJ8SKmWRGLpbgdWRPnK_VIaznQFyWOz-8hY6Al3bAxnojPM8l9qa8t8WC2xDQcbXaEjHvtlAWPuU4mfGG-2GDcbXNgvqZSfLVXsoAm5A-jDkwB2VvVryddSAs9I&sz=w22-h26&ats=1469116280159&rm=1560d852c26acb4a&zw&atsh=1" style="height:13px; min-height:0.1354in; width:0.1145in" /></a> <a href="http://rsch.baml.com/r?q=DEWcAo5EoLbVo6SEQtxt2g&e=presthaya.fixter%40baml.com&h=ZveVoA" target="_blank">UK Economic Watch: Recession, stagnation or recovery? Tracking Brexit fall-out</a></p>

<p><br />
•   No hard data for the post-referendum period are available yet, but a range of surveys point to a downturn in growth.<br />
•   Uncertainty measures have risen sharply. If sustained that would be big economic headwind. How EU-UK talks progress key.<br />
•   Uncertainty should affect investment the most. Firms investment intentions have fallen. Consumers response seems more muted.</p>

<p><strong>A range of data point to an economic slowdown</strong></p>

<p>No hard data for the post-referendum period are available yet, but a range of business, consumer and housing surveys point to a loss of economic momentum, sometimes significant. So far that is more evident for firms than households. We are extremely uncertain about how the economy will perform: the vote was, after all, less than four weeks ago. And soft data can be volatile and over-react. But the data so far give us little cause to shift our economic forecasts. We look for a very mild UK recession (three quarters of -0.1% growth) followed by a gradual recovery as uncertainty fades. In other words, the data at present point to recession or stagnation, not recovery.</p>

<p><strong>Uncertainty shock appears large</strong></p>

<p>Brexit could have profound implications for the long-term UK outlook. But here we focus on the short-term economics, which are likely to be mostly affected by uncertainty (over future trade terms, politics, future income). Uncertainty measures have risen sharply since the referendum. If sustained, that would be a significant headwind to growth.</p>

<p><strong>Firms seem to be reacting</strong></p>

<p>Surveys so far suggest weaker output growth and a large downshift in firms' investment intentions. That makes sense. Heightened uncertainty should particularly affect costly irreversible decisions: business investment and property transactions. The cuts we made to our growth forecasts were heavily driven by business investment.</p>

<p><strong>Consumer sentiment down, spending okay, housing wobbling</strong></p>

<p>Consumers' reaction seems muted. Although confidence has fallen sharply that is not always strongly related to actual spending, which is holding up. Car registrations and retail sales growth have slipped, but not sharply. Real estate agents expect the housing market to weaken markedly, which could feed through to consumer spending. Google search data provide very tentative evidence that jobless numbers could be rising. But these trends, along with the effect of sterling driven higher inflation, will likely take longer to feed through to growth than uncertainty via investment.</p>

<p><strong>Be cautious given shock of referendum, low quality data</strong></p>

<p>Most surveys currently available were taken during the period of extreme political uncertainty before Theresa May became Prime Minister. Some may have over-reacted. Finally, the very high frequency data we use (because it is timely) is volatile: false signals are possible. We should be cautious interpreting the data, obviously watch carefully how sentiment changes in the coming weeks and whether it feeds through to the hard data.</p>

<p><strong>How will uncertainty evolve from here?</strong></p>

<p>The $64,000 question. If uncertainty fades quickly, then the short-term economic fall-out will likely be smaller. Uncertainty might fade if the UK looks likely to negotiate a good trade deal with the EU; that would also minimize the long-term Brexit impact. Our base case is protracted uncertainty and a poor trade deal. There is little hard evidence on how talks will pan out but what there is does not bode well for smooth negotiations in our view e.g. Brexit Minister David Davis' recent statements.</p>
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