Divergences across economies are creating long and short term investing opportunities across global markets, said Sinead Colton, head of investment strategy at Mellon Capital (BK) . Colton says U.S. stocks should benefit in aggregate to the growth-oriented reality, but large caps may experience a drag on earnings due to the stronger dollar. Beneficiaries of a stronger dollar include exporters in international markets such as core Eurozone and Japan. On the flip side, Colton said emerging market assets will most likely suffer due to anticipated higher U.S. rates, and potentially higher cost of servicing US dollar denominated debt. Colton says investors also need to be aware of the impact of 'surprise' inflation on asset classes over the short term and the long term. The switch to focus on inflation and growth post-election, versus the low-growth, low-rate environment that was assumed before the election, demonstrates the importance of benchmark agnostic, go-anywhere investing in today's macroeconomic environment, according to Colton.
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