Markets & Economy
Fall 2017

A Market Commentary

A Market Commentary
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Executive Summary

After a summer marked by geopolitical tensions, investors ended the third quarter of 2017 with renewed optimism in global growth.

While news headlines were breathlessly focused on geopolitical risk in North Korea and partisan rifts in Washington, markets barely paused to digest the news. Markets rose over the quarter, driven by a string of positive global economic data, central bankers acknowledging firming global economies, and a renewed late-September push for tax reform.

Notably, investor sentiment has become more upbeat relative to the summer, as signs of favorable macro fundamentals and corporate strength have been the dominant theme driving markets. Higher oil prices, a firmer U.S. dollar, a less dovish tone to central banks, a steepening yield curve, improving leading indicators, and a focus on U.S. tax cuts have all caused a rotation into year-long laggards, adding a firmer foundation to the market. As we move to close out the year, it is clear that the global economy is enjoying a synchronized cyclical upswing. Improving global growth, better economic surprises in developed economies, largely accommodative central banks and improving earnings momentum are all driving global risk assets higher.

Major Equity Indices

Daily Closing Prices

Shiller's Cyclically Adjusted

S&P 500 Forward Price

Subdued Volatility

The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index that is designed to measure equity market performance of emerging markets. The Nikkei 225 Stock Average is Japan’s premier¬ stock index. It includes the top 225 blue-chip companies listed on the Tokyo Stock Exchange. The Standard & Poor’s 500, often abbreviated as the S&P 500, or just “the S&P,” is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices. The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large-, mid- and small-capitalization companies across 17 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. An investor cannot invest directly in any index.

Forward price to earnings (forward P/E) is a measure of the price-to-earnings (P/E) ratio using forecasted earnings for the P/E calculation. Gross domestic product (GDP) is the broadest quantitative measure of a nation’s total economic activity. CBOE Volatility Index (VIX) reflects a market estimate of future volatility for the S&P 500 Index based on a weighted average of the implied volatilities for a wide range of option strikes. Shiller’s CAPE: Cyclically Adjusted Price-Earnings ratio (CAPE) based on the S&P 500 inflation-adjusted price divided by average earnings from the previous 10 years.

Views expressed are those of the advisor stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. The Dreyfus Corporation and MBSC Securities Corporation are companies of BNY Mellon. © 2017 MBSC Securities Corporation, 225 Liberty Street, 19th Floor, New York, NY 10281.

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