In a Nutshell
- Stocks became favored again relative to bonds as markets have decided that the best (worst?) days of easy monetary policy are in the rear view mirror.
- Some of the best performing stocks for the year sold off during the quarter. It’s too early to tell if this is a short term reversal or the beginning of another change in leadership. It could be a result of investors taking profits ahead of the election and expected interest rate increases over the next year.
- Government and investment grade bonds were essentially flat for the quarter, acting as a drag for conservatively invested accounts.
- International stocks, especially emerging markets such as China and Brazil, continue to recover.