- Recent economic data indicates a modest pickup in U.S. GDP growth, but we do not expect dynamic growth to be sustained given the progress already made in the economic cycle.
- U.S. sectors with attractive growth and stability of earnings should outperform going forward, while the most economically-cyclical sectors face risks to meeting elevated earnings expectations.
- European economic growth appears to be decelerating amid ongoing structural challenges and increased political volatility.
- Emerging markets are particularly at risk from slower international economic growth, U.S. protectionism, and U.S. dollar strength.
- U.S. Consumer Staples and Health Care overweights provide attractively valued earnings stability in this extended expansion.
- Overweights to U.S. Consumer Discretionary and Information Technology leverage ongoing consumer strength and secular trends, including migration to digital media and payments.
- Avoidance of U.S. Energy, Materials and Industrials limits portfolio reliance on economic acceleration.
- Underweights to international markets reflect our expectation for economic deceleration abroad and U.S. dollar strength.
• U.S. Consumer Discretionary
• Emerging Asia
• U.S. Industrials
• U.S. Energy
• North America ex-U.S.