Slowdown is no reason to be bearish on US equities

The outlook for the US equity market is quite favourable. The cornerstones of our bullish view on equities are: attractive valuations, a favourable economic backdrop, a benign to supportive Federal Reserve policy environment, and a huge disconnect between bond market and stock market valuations that should accrue to the benefit of stocks. In contrast to the last several years, when equity returns have been driven by strong earnings growth partially offset by P/E multiple contraction, equity returns in 2007 are expected to be driven by more modest earnings growth enhanced by P/E multiple e...