Gathering Storm or Passing Clouds?

The past few weeks have been a fair representation of the majority of the year, with higher volatility, sharp moves on the down side (with sharp counter-trend rallies), a focus on the Fed and trade relations. Discipline and defense and have been warranted this year; and likely will again heading into next year. Starting late last year, we made several tactical recommendation changes which brought our overall global equity recommendation to slightly underweight—with a relative overweight to U.S. large cap stocks and a relative underweight to emerging markets (EM). This past August, we lowered our rating on the technology and financial sectors (from outperform to neutral) and raised our rating on the utilities and REITs sectors (from underperform to neutral); thereby leaving only healthcare with an outperform rating. With a corresponding underperform to communications services, our sector recommendations clearly have a defensive tilt.

Read the full article by Schwab Center for Financial Research.

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