US Should See Modest Earnings Growth: Schroder

Joanna Shatney, Schroder head of US large cap equities, looks ahead into 2012

US companies should provide modest earnings growth even in a difficult macro backdrop. Our base case reflects modest revenue and margin expansion, but if economic growth proves more challenging, we expect capital redeployment to protect total return.

Valuations are low relative to history – other developed markets might be cheaper, but carry higher risk and companies have fewer levers to pull if economic challenges worsen.

Instead of just focusing on macro events, we are hopeful that fundamentals will prove strong enough to break the correlation story of 2011.