Equities are currently testing the tops of their recent trading ranges, and we think whether this is resolved by stock prices moving higher or by falling back will depend on the tug-of-war between ample global liquidity and a slight softening in corporate profits. Easy monetary policy, the drop in oil prices and the rise of the U.S. dollar have all been positive factors for the consumption-oriented U.S. economy, but they have also put downward pressure on U.S. profits.
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