Companies 'too optimistic' about economic prospects

UK GROWTH

"It was best of times, it was the worst of times...", wrote Dickens. What is the relevance of this famous quote for the UK stock market?

It reflects the ongoing tug of war being played out daily in the London market between improving bottom-up company fundamentals and top-down structural concerns. Companies across the board are beating earnings expectations and commenting life is generally getting better. Indeed, one or two companies we have seen lately have commented they have just had their best quarter ever and the outlook is robust. However, over time, companies’ managements have been over-optimistic about the prospects for the economy. At the same time, structural concerns exist. The global economy remains overlev...