Investors remain calm as equity prices move higher against a backdrop of very low volatility... Investor attention remained focused on Washington, D.C. last week. The Senate passed a budget resolution, while President Trump is set to announce who he will select as the next head of the Federal Reserve. These factors, combined with ongoing solid economic data, allowed the so-called reflation trade to continue as higher-risk financial assets gained ground. U.S. equities notched their sixth consecutive week of gains... Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

The lack of volatility is puzzling considering current events... This year, one of the big market stories has been the lack of volatility. Pullbacks have been incredibly shallow as the market has been grinding upward this year. As of the end of the quarter, it had been about 10 months since the S&P 500 had experienced a 3% drawdown or larger. The extremely low volatility is bringing more investors back to stocks, and making investors less fearful of equities. These are both good things for momentum, which is performing well this year. Read the entire Dorsey Wright Q3 market commentary here. [+] Read More

JP Morgan Reviews Investing Opportunities & Rate Expectations JP Morgan’s Guide to the Markets for fourth quarter 2017 is now available. This comprehensive, 60+ page guide includes insightful charts illustrating: Corporate profits and financials Fixed income sector returns Local investing and global opportunities Federal funds rate expectations [+] Read More

Given our positive view on growth, we maintain a pro-risk tilt in our asset allocation. As the U.S. economy moves into late cycle, we are naturally more attuned to any dip in higher frequency data, but currently we see little risk of recession in the next 12 months. As a result, we remain overweight (OW) stock-bond and underweight (UW) duration—albeit with slightly lower conviction in light of the failure of inflation expectations to advance alongside other macro data. Correlation across regional indices remains low, favoring broad diversification across global equity markets. But at the margin our most favored regions remain the eurozone and Japan, ahead of the U.S. and emerging markets, with the UK our least preferred region. In bond markets we expect yields to grind higher over the fourth quarter and see U.S. Treasuries outperforming most other sovereign markets, in particular German Bunds, which look vulnerable given the robust level of eurozone growth. Elsewhere we remain neutral on credit, real estate and commodities, and UW cash. In a distinctly mature credit cycle, returns from credit will come from carry rather than capital appreciation; nevertheless, we expect credit to outperform government bonds even if it lags stocks. Overall, we take a pro-risk stance in our portfolios but are mindful that with the economic cycle maturing, liquidity and diversification are paramount. Read the entire market commentary here. [+] Read More

Despite Roadblocks, Expect the Bull Market to Continue... Following a down week for stocks, investors adopted a risk-on approach, moving back into equities. While the damage from Hurricane Irma was devastating in terms of human costs, the economic impact was less severe than feared. The S&P 500 Index rose 1.6% last week and all major U.S. indices reached new highs. As part of the broader outperformance trend among risk assets, Treasuries were weaker across the yield curve last week, the dollar rose slightly, gold prices fell and oil moved higher. Read an excerpt of the complete commentary below, or download the complete commentary as a PDF. [+] Read More

We see more political uncertainty ahead... Washington averted an imminent fiscal crisis, but the result could be a steep fiscal cliff in December or early 2018. We see heightened political uncertainty toward year-end as the U.S. Congress must revisit lifting the federal borrowing limit and funding the government. We could see this delaying and reducing the scope of any tax reform. Read an excerpt of Richard Turnill's weekly commentary below, or view the entire weekly investment commentary here. [+] Read More

We advocate sticking with a pro-growth investment stance... The devastation caused by Hurricane Harvey dominated the news last week. From an economic perspective, damage to the region’s energy infrastructure is likely to cause local disruptions and contribute to a temporary increase in gasoline prices. But we expect the broader economic and market effect to be limited. Equity prices rose for a second straight week, with the S&P 500 Index up 1.4%. Health care, technology and industrials led the way, while financials and bond proxies such as telecommunications and utilities fared the worst. Read an excerpt of the complete commentary below, or download the complete commentary as a PDF. [+] Read More

Escalating Political Uncertainty Drags on Stocks As last week began, attention was focused on attempts to dial back tensions between the United States and North Korea. As the week progressed, investor focus turned to the backlash over President Trump’s comments in the wake of the violence in Charlottesville. Despite good economic and earnings news, the negatives won out and stock prices fell for a second week, with the S&P 500 Index dropping -0.6%. Global financial markets are enduring a bumpy phase, largely due to rising geopolitical tensions and domestic political uncertainty. While the damage to equity markets and other risk assets has so far been minor, investors are focusing on potential downside risks that could trigger additional damage. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

Investor sentiment shows more signs of fatigue than euphoria... Equity markets have greeted positive earnings reports largely with indifference. Investor sentiment shows more signs of fatigue than euphoria, even as stock markets have repeatedly reached new highs this year. Yet we see solid fundamentals and returns in the second half, with the latter largely tracking earnings growth. Read an excerpt of Richard Turnill's weekly commentary below, or view the entire weekly investment commentary here. [+] Read More