SEPTEMBER 2021

Still Strong but Slowing Growth Momentum

• Global stocks gained 2.5% in August bringing the YTD gain to 16.2%. Positive returns were widespread as both developed and emerging markets were ~2.5% higher.
• In developed markets, the US continued its outperformance as the S&P 500 was 3.0% (21.6% YTD) followed by the MSCI EAFE’s 1.8% (12.0% YTD).
• In the US, big tech and growth led as the NASDAQ was 4.1% (18.9% YTD) and the MSCI US growth returned 3.8% (21.6% YTD) which was double the performance in value (19.5% YTD).
• Among factors, quality in both the US and international lead YTD. Yields gained, credit spreads tightened, and the USD increased 0.5% and is 3.0% YTD.
• A lower-than-expected US jobs report and a shift lower in consumer confidence during August globally highlight the increased caution as a result of the surge in Covid cases.
• While global growth momentum is slowing, demand remains supported by easy financial conditions and excess savings.
• Vaccine effectiveness against hospitalizations remains key and will help the economic impact from higher cases be less than prior waves.
• We expect steady progress for risk assets but at a slower pace with more pockets of volatility.
• Given the increased caution and outlook uncertainty alongside slowing but still positive growth, quality and growth stocks should continue to outperform if rates remain contained and inflation is temporary. The key to whether inflation will be transitory or more permanent is the ability for the supply side to match demand.