In the October issue of our monthly flagship publication, we feature:

  • On the Record by Chief Investment Officer Tony Roth discusses how, despite the economic and other potentially significant risks that are present, the economic outlook bodes well for the aging-but-still-raging stock market.
  • In Focus examines the wisdom of investing new cash in a stock market that is trading at or near all-time highs, years into a bull market—and what’s happened to “buy low, sell high.”
  • Investment positioning, major themes, and asset class positioning updates.

As stewards of our clients’ capital, our primary objective is to continuously assess the balance of risks at any given time and adjust portfolio allocations accordingly. In our April issue, I contrasted economic and exogenous risks and highlighted a shift in the balance, with the latter weighing more heavily. This month, we update that framework and highlight several catalysts that could move markets, with our bias being further stock market appreciation.  In short, the economy remains strong and no single exogenous risk can currently be identified as dire to either our economic or market outlook. 

All of the top economic and exogenous risks to the U.S. stock market are two-way, meaning they could unfold in a way that either supports or inhibits the stock market’s ascent, but in aggregate we assess them as tilting toward the positive.

We continue to see the economic risks as controlled and evidence of a solid economic backdrop. The first of these risks, inflation, has picked up this year, but we expect it to moderate going forward at levels right around the Federal Reserve’s target (2% year over year for the Core PCE Index). This should allow the Fed to continue on its gradual pace of monetary policy tightening without slamming the brakes on the economy through sharply higher interest rates—our second economic risk factor.

Please see important disclosures at the end of the article.

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