US facing rough future

President Bush's emphatic election win and the retreating price of oil have set global equity markets up for a traditional year-end rally. Earnings growth may be slowing from unsustainably high levels but is not declining, interest rates expectations are moderating and substantial liquidity is sitting on the sidelines. On balance, therefore, a rally is believed likely. However, longer-term performance may not be as rosy. The US may have contrasted with the rest of the world by recording stronger Q3 growth than in Q2, but we do not expect this pick up to be sustained. The oil price rise ov...