The following blurb from BCA Research yesterday comports to a virtual T with our go-forward macro thesis related to equities and, per the last sentence (although for add'l reasons), the dollar -- and, thus, with our present on balance positioning:
"...global growth momentum is set to rotate from the US to the rest of the world. This will raise the earnings prospects and thereby prices of ex-US equities, which will reduce the relative appeal of US equities. Second, the tech sector – which alone accounts for over a quarter of the S&P 500 market cap – likely needs to generate strong gains for the US bourse to outperform. However, interest-rate sensitive tech stocks are vulnerable as bond yields climb higher.
Together, these two observations suggest that, Euro Area bourses will benefit from an improvement in the region’s relative growth differential vis-à-vis the US and outsized weighting of financials and industrials, which will benefit as interest rates move higher. A deterioration in the appeal of US equities would in turn be a headwind for the greenback."