Citi's outlook for 2019 stock markets, expecting EPS growth to slow in 2019 but not as much as markets are currently discounting

  • Our Bear Market Checklist (3.5/18 red flags) wants to buy this dip

(ps the note written last week)


  • At the market peak in September, there were only 4/18 red flags, now there are 3.5. A flat yield curve and rising credit spreads are worrying, but traditional signs of bull market euphoria (big equity inflows, corporate excess) remain notably absent
  • While investors have moved to price in a global EPS contraction, they are not yet discounting a full-blown recession. Our market views and recommendations are too optimistic if this were to occur


  • We still favour US equities
  • We upgrade EM, now our preferred value play given expectation of US$ weakness.