There's a surprising twist at the end of the 'synchronized global growth' story

BI Studios

We keep hearing about "synchronized global growth" as it has supported stocks over the past two years and also as a case for equities going forward. Based on a recent note from Fidelity Viewpoints it seems the synchronized expansion story still holds though global growth may be peaking. Fidelity points out the US "is experiencing a mature expansion, with mid-cycle dynamics and some hints of late-cycle trends."

When the US is in the late phase of the business cycle that generally generally benefits emerging markets according to analysis from Fidelity Investments.

"The US late cycle has traditionally been characterized by growing inflationary pressures and rising commodity prices, which have tended to boost emerging-market (EM) equities due to their exposure to commodity exports and strong global growth." But things have changed and tech now represents nearly twice commodity-linked sectors like energy and materials in emerging markets.

Fidelity remains constructive on global stocks. In part because international equity valuations are well below those for the US. Just don't expect the same boost in emerging markets that we have seen at the end of past cycles. Also, expect more volatility in equity markets around the world due to the rising risk of inflation everywhere.

READ MORE: Expect more volatility and perhaps a different emerging playbook