Inching Towards a Solution

27
Oct

Inching Towards a Solution

Video Commentary & Perspective

The European sovereign debt crisis, slowing growth in China, and a myriad of issues in the U.S. combined to create significant equity market volatility through the summer. While none of the issues should be taken lightly, negative headlines around these controversies have tended to overshadow more positive factors.

Key Takeaways

• A solution to the Eurozone crisis is on the way, corporate profitability remains solid, and there is a pent-up need for capital spending to replace aging equipment globally, oil prices are lower, commodity prices have eased, mortgage rates are going down in the U.S., and inflation expectations around the world are modest.
• Slowing, not slumping growth forecast for global economy into 2012
• China on course for soft landing; U.S. in a lull; signs of small ‘v’ in Japan
• Policymakers take first steps to resolve Eurozone’s financial chaos, secure banks
• Corporates preferred over relatively low-yielding government bonds and T-bills
• Equities due for a bounce; valuations still attractive. Dividend-payers favoured

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