The facts, the Fed, and the flows

Global equities have now returned close to 100% in just the past five years and have been little affected by the recent rise in geopolitical tension. Between record central bank stimulus, low market volatility, and new market highs, there is little wonder that financial news outlets are full of stories suggesting that the market’s performance is as artificially enhanced as some previous Tour de France winners.

At a glance

  • „„Global equities have now returned close to 100% in just the past five years, but we believe today is not the time to fight the facts, the Fed, or the flows.
  • While equity markets are near new highs, most valuation metrics we monitor are not at levels that prevent markets going higher.
  • Central banks would rather keep policy too loose than tighten too soon. This should prove supportive for both equities and credit over our tactical horizon.
  • „„Both companies and investors have, what we believe to be, excessive levels of cash to deploy.

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