While the bears continue to worry about negative earnings revisions and weak macroeconomic momentum, global equities continue to go up. The S&P 500 index had its best two month start since 1991, and March has again started with a gain.

The pace of earnings downgrades has slowed, and various leading indicators point to a growth acceleration for later this year. While we have to acknowledge that earnings growth has recently slowed significantly, we clearly disagree with the conclusion that this represents a major risk for the equity bull market.

Looking at the details, we are inclined to paint a much more constructive picture for equities, as the negative earnings revisions were mainly driven by oil & gas and other commodity companies, as well as by a few selected large caps, mainly in the technology space. We would argue that most of these adjustments were driven by concerns related to global trade and the implications of the US-China trade conflict.

For investors who want to generate yield on equities but are unsure how long the upward movement in the equity markets will continue and do not exclude that market corrections may occur, a barrier reverse convertible with a lock-in feature might be an investment alternative. Thanks to the lock-in feature, investors have the chance to lock-in a guaranteed repayment of 100% should the product underlyings increase above the lock-in level while receiving the whole coupon until the maturity.

Highlights

• If all underlyings are at or above the 103% Lock-In level at the monthly observation date, the repayment at maturity is 100% also if the barrier has been breached
• Coupon of 6% p.a.
• Risk buffer of 35%