Deutsche Bank on US: risk to growth to topside, risk to inflation to downside. Bullish.

Deutsche Bank raised thier S&P 500 target to 5,500 last week, reasoning (in brief):

• a strong earnings cycle, admits valuations appear to be “pretty full’, but says they are not too highcompared with historical standard
• economic expansion, says this’ll continue and that forecasters have underestimated economic growth for seven quarters
• easing price pressures, inflation mostly reflects factors like seasonality and the stickiness of measured rents

DB does not think the market is pricing in too much, saying:

• the risk to growth relative to the macroeconomic consensus looks to us to be on the upside
• and the risks to inflation we see as basically being to the downside

This article was written by Eamonn Sheridan at www.forexlive.com.