Stocks struggled last week amid more evidence out of the world’s largest economies that global economic growth isn’t accelerating as expected.

In the United States, March retail sales, industrial production and housing figures all disappointed, and the persistent softness in U.S. economic data means the United States will struggle to hit the 3% annual growth rate that investors had expected at the beginning of the year. Meanwhile, first quarter growth in China decelerated to 7%, the slowest pace in six years.

However, as I write in my new weekly commentary, “QE: The Silver Lining of Slower Growth,” slower growth has a silver lining: the potential for greater monetary and fiscal stimulus.

Investors in China, for instance, are hoping slower growth will lead to stimulus by the government. Investors are being similarly consoled in Europe, where, European Central Bank President Mario Draghi just reiterated his commitment to Europe’s quantitative easing program. Even in the United States, the weak pace of global growth has reassured investors that a potential interest rate hike by the Federal Reserve isn’t a near-term threat.

As has been the case for most of the past six years, slow growth and the monetary stimulus intended to combat it benefit some markets and hurt others. Among the beneficiaries of this environment: many, although not all, financial companies.

With interest rates low and most central banks stuck in a position of near-permanent easing, it should come as little surprise that many large financial firms are seeing a benefit.

Though an improving economy later this year could lead to a pickup in loan demand and raise earnings potential for banks, it’s true that traditional banks are struggling with low rates and declining net interest margins. Case in point: Wells Fargo recently reported that its net interest margin fell below 3% for the first time in at least a decade.

However, financial firms with large capital market operations and merger-and-acquisition desks are thriving. Low rates have translated into a surge in mergers and an increase in currency trading, both big moneymakers for investment banks. Just last week, JP Morgan and Goldman Sachs reported strong numbers, with Goldman’s profits at a five-year high.

Looking forward, I see the favorable environment for such financials continuing, and accordingly, I’m still overweight the global financials sector.

This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.

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