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By Charlie Dreifus, CFA, Portfolio Manager, Managing Director, Royce Associates (a Legg Mason company)
The market outlook remains fragile. High valuations, a choppy economic outlook, record profit margins, and little if any foreseeable earnings growth all combine to suggest that the market is likely to recalibrate lower if a significant black swan should appear.
There are many structural problems around the world yet central banks are left with fewer tools to deal with them. Could a longer, slower-growing U.S. economy push country "x" off the rails? These higher global risks would perhaps result in lower P/E's despite the positive of lower inflation and record-low interest rates as a result of that risk off environment. It is not...
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