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Goldman Sachs' global economic forecast for 2014 is not good news for Canadian equities and strongly suggests that investors should continue shifting portfolios to U.S.-dollar assets.

Economist Dominic Wilson's overriding investment theme for 2014 is U.S. and developed market outperformance of emerging markets. He expects the "long-awaited shift towards above-trend growth in the U.S. to finally occur," spurred by household consumption and corporate capital expenditure.

Mr. Wilson is not predicting disaster for the economies of Asia and Latin America, but "with less slack, more inflation, and ongoing imbalances, there is less scope for acceleration."

This forecast, if correct, would see another year where the S&P 500 outperformed the resource-heavy S&P/TSX composite. After a decade where the annual return of the TSX was 7 per cent higher than U.S. equities (in Canadian-dollar terms), domestic equities have trailed the S&P 500 by more than 20 per cent in 2013.

Importantly, the Canadian economy would be a big beneficiary of resurgence in U.S. growth. But the domestic equity market – still 36 per cent materials and energy stocks – would be hurt by declining resource demand in the emerging markets.

The history of investment bank research teams predicting the economy is mixed (to be charitable), so investors should always take these year-ahead reports with a grain of salt. Inevitably, the majority of economists will forecast an accelerating U.S. economy for slightly different reasons, beginning at a slightly different time of year.

In Goldman Sachs' case however, I'm more inclined to trust Mr. Wilson because the forecast is more or less a continuation of trends already apparent in global markets. The most important of these trends – a stronger U.S. dollar, slowing emerging markets growth, and low inflation – will benefit Canadian investors who allocate more portfolio assets to U.S. markets.