In the third quarter, decelerating global growth combined with worries about political dysfunction in both Washington, D.C., and the eurozone to send stocks plunging and volatility soaring. Jeffrey Morrison, in his Equity Outlook, notes that in the equity market, valuations remain attractive but that the earnings outlook continues to deteriorate. He adds that going forward stock market direction and leadership will be controlled by macro forces and technical factors.
In his Fixed-Income Outlook, Robert Hall warns that the tail risk of the debt crisis in the peripheral countries of the eurozone and the United States appears the most significant threat to continued global expansion. Against this backdrop, Hall adds the prospect of making an accurate near-term directional call on interest rates remains daunting. Click here to read the full outlook.