Market Commentary for October 2021

The Rotation is Underway

I continue to be a fan of the Chief Investment Office at Merrill Lynch (former colleagues of mine from ML Alternative Investments) and their macro research. Below is an excerpt from their October 2021 Viewpoint report:

In Brief:

Leading economic indicators suggest cyclical momentum is picking back up as the most recent coronavirus wave eases. The macro backdrop continues to support cyclical, reflationary positioning. We believe this is a positive backdrop for Equities.

The U.S. remains our preferred equity region relative to the rest of the world, with stronger balance sheets on aggregate, robust economic growth prospects, and strong earnings revisions.

The Federal Reserve (Fed) indicated at its September Federal Open Market Committee (FOMC) meeting that tapering of asset purchases is likely to begin in November and finish toward the middle of next year.

We expect volatility to rise as financial conditions tighten as the Fed begins to taper and interest rates drift higher.

Read the full report here

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