• Global equity markets rebounded strongly this week, supported by positive newsflow on the trade front,
and an improvement in earnings delivery vs the early part of the Q3 reporting season. At a sector level,
Cyclicals are bouncing versus the Defensives, with Miners strongly outperforming in both the US and in
Europe. • Our Global Equity strategists reiterated their call of buying into the October correction.
Positioning has become very negative and VIX has produced a buy signal. The sentiment over the China
outlook, and the global cycle prospects, is too bearish, in their view. The compromise on trade gets more
likely as US equities are not decoupling from global anymore. Our strategists are encouraged by the
resilient trends in EM FX, which appears to have bottomed in early September, and some peaking in USD.
They remain OW US vs European equities, expecting US results to do better than the European ones. Chinese
policy response is stepping up and should be evident in dataflow from October. The summer
underperformance of Miners is overdone in their view, and they argued one should be buying into the
sector. Iron ore price is steadily moving higher, up 30% in last two months and key industrial metal
inventories are close to the bottom of the range. Miners earning have the potential to see upgrades to
the tune of 10% for 2019e and as much as 20% for 2020e. Miners have far better balance sheets and cash
flow generation currently vs the ’15 episode. Finally, our strategists note that there are important
benefits of owning Miners at this stage of the cycle. Inflation is moving higher and Miners are a good
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