Volatility Likely to Linger, But Value Starting to Emerge From Broad Market Weakness

Here’s What We’re Thinking

September 10, 2015

After a sharp selloff that was prompted by concerns about Chinese growth, equity markets have started to stabilize with developed markets modestly outperforming emerging ones. Markets should remain on edge in the near‐term, however, as the Street is becoming increasingly divided on whether the Federal Reserve will hike interest rates as early as September 17 (next FOMC meeting) or push out rate hikes into early 2016. So long as global growth remains intact and valuations stay reasonable, we don’t think medium and long‐term investors should fret about potentially higher short‐term rates in the U.S. as equity markets have historically performed well during the initial phase of Fed tightening. We think the recent decline in equity markets has created selective opportunities….

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