Investment Strategy: Limited near‐term catalysts for equities, Revised Fed timing hurting fixed income, Window of opportunity opening for preferreds.
Equities: After a turbulent summer, relative calm has returned to global equity markets in recent weeks. Increased monetary stimulus from central banks, China and the ECB in particular, has played an important role reassuring investors that pro‐growth policies will remain in place for a prolonged period. However, the Federal Reserve has taken up the role of potential spoiler by raising the prospects of an interest rate hike as early as December (see below). With valuation of U.S. equities (16.7x NTM P/E) once again nearing multiyear highs and Fed‐related uncertainty returning to the forefront we find ourselves less enthusiastic than we were just a few weeks ago.