- The global economic outlook remains positive, bolstered by a trend of moderate economic growth in the U.S., where Q3 data reaffirmed that the U.S. consumer remains healthy.
- European economies remain constrained by structural and cyclical issues, with data this year pointing to softer economic activity.
- Japan’s personal income and business CapEx have improved, and Asian equity valuations have declined markedly versus the U.S.
- U.S. trade policy presents uncertainty, but short of an extended escalation of Chinese tariffs, its impacts should be limited; Asian markets, in particular, stand to benefit as tensions ease.
- We favor U.S. sectors with both cyclical and secular tailwinds, like the new Communication Services Sector, while avoiding more economically-cyclical and interest rate-sensitive sectors.
- Adjustments within the strategy’s U.S. allocation tied to the creation of the Communication Services Sector at the end of Q3 did not reflect a change in our outlook or underlying exposures.
- While still underweight international equities, we modestly increased developed and emerging Asia exposure in Q3, as falling valuations this year improved the region’s risk/reward profile given our outlook.
• U.S. Health Care
• U.S. Energy
• Emerging Asia
• U.S. Consumer Staples
• U.S. Industrials