Global and US stocks hit a fresh record high amid mounting optimism that US-China trade talks are making progress. China's Ministry of Commerce said the two nations had "reached consensus on properly resolving relevant issues."

But we favor a cautious overall stance on stocks for three main reasons:

So instead of focusing on overall price gains for stocks, we prefer relative value trades within equities. We like US equities. Besides the fact that we expect fairly strong earnings growth in the US, we also think Fed support could help limit the relative downside for US equities in case the economic picture deteriorates. By contrast, the ECB has less room to react in the event of a downturn. We also favor Japanese equities versus the Eurozone based on attractive relative valuations. For more details, please see our "Global earnings outlook 2020" and our "Year Ahead 2020" publications.