Citigroup Inc. (NYSE:C) continues to be quite bullish on global equities, with their economists and equity strategists predicting strong growth and encouraging people to take on more risk as systemic risk continues to decrease in a recent report from Chris Montagu, Liz Dinh, Javier Guardo and others.

Citigroup Inc. (NYSE:C) predicts that real global GDP growth will go from 2.5 percent to 3.2 percent in 2014, and that the U.K. and Eurozone will also accelerate, from 1.4 percent in 2013 to 3.0 percent in 2014 and from -0.3 percent to 0.7 percent respectively in recent forecasts. The Citi team also thinks that there is an 18 percent upside to global equity markets next year. “Financials are the consensus overweight across our strategists and so too for our quant models,” says the report.

Systemic risk falls in U.S. and Europe

At the same time, systemic risk continues to fall in both the U.S. and Europe. It’s been dropping since the beginning of 2012 in both markets, but the process has accelerated over the last few months, and even the debt ceiling fiasco hasn’t had much impact (apparently investors think there’s very little chance that the U.S. will default).

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“Our regional market timing models based on this measure both indicate 100 percent allocation to risk assets (i.e. equities) and a bullish stance on equities as we head into year-end,” says the report.

Citi advises to  hold value and pick stocks

But even though all signs point to buying stocks, Citigroup Inc. (NYSE:C) advises people to hold back on value and pick stocks with the knowledge that you’ll probably making picks in a pretty forgiving market. Also, it could make more sense to wait a bit before taking on risk to see how the government shutdown and debt ceiling debates play out. Even if you think there is no chance of a US default (and the odds aren’t zero, even if they’re very low), temporary extensions and other half-measures could allow this tension to continue for months without reaching a real conclusion.

“We remain reluctant to go ‘all in’ on value given political risks and potential short term headwinds,” says the Citigroup Inc. (NYSE:C) report. “Decreasing systemic risk leads to a more attractive stock picking environment suggesting estimates momentum will be a more robust choice.”