Monetary policy divergence among central banks is breeding greater uncertainty in the global economy, but that is no reason to give up on U.S. or European stocks, says Fred Babu, CO-CIO of Natixis Asset Management U.S. 'One of our key themes this year is that there is light at the end of the tunnel and we are still constructive on the world’s riskier assets,' says Babu, adding that he positive in U.S. stocks but more bullish on European and Japanese equities. Babu believes that investors should remain nimble and diversified because while the road ahead may be higher, it will likely be rockier as well due to monetary policy distortion, potential liquidity air pockets and fringe politics. Investor complacency around bond and equity valuations will also leave room for surprises in his opinion. Still, he sees the strengthening dollar in a positive light despite the fact that it weighed on U.S. stocks in the first quarter. 'We expect the dollar’s strength to continue albeit at a slower pace going forward,' says Babu. 'It has hurt some companies on the top line, but earnings continue to grow and the U.S. economy has been able to weather it.'
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