Reduced Geopolitical And Fed Rate Uncertainty Opens Window For Risk Assets; Our Preference For Defensive And Commodity Sectors Remains Intact

Here’s What We’re Thinking

July 14, 2016

Global markets remain in a state of alternating phases of optimism and pessimism driven by cross currents created by uncertainties related to Brexit, the global growth outlook, and fluid central bank policy. We remain generally constructive on markets given stable U.S. economic dynamics and a steady stream of policy support from both monetary and increasingly fiscal policymakers.However, the overall magnitude of upside potential is an open question given cycle-high valuation levels. We advocate investors continue to hold a moderate cash level with an eye to deploying on any meaningful pullback in either quality-yield investment exposures (sustainable dividend payers, investment grade long-term corporate debt) and under-owned commodity-related recoveries (energy, materials, Canada, emerging markets).

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