While we await further clarity on the Omicron variant’s transmissibility and how it holds up against current vaccines, we would expect heightened volatility to remain within equities. That said, markets remain above key technical levels as buyers appear willing to step in and support stocks at lower prices.
As of month-end, our Momentum Dial remains in a Positive position.
In the latest OECD Economic Outlook, both global growth and inflation are projected to remain above-average in 2022 before moderating in 2023. While this all but puts to bed the notion of “transitory” inflation, real (inflation-adjusted) growth should more than compensate for the expectation of higher prices.
Despite this uncertainty around inflation, our Fundamental Dial remains in a “Positive” position based on the current pro-growth landscape.
Equity prices have seen their own bout of inflation, with large cap US stock valuations reaching toward historic highs. Due to the risks imposed by these stretched multiples, our Valuation Dial continues to show a “Negative” reading.
Our Three Dials composite reading takes a “Cautiously Optimistic” view into the final month of the year, as continued strength in the areas of Momentum and Economic Fundamentals are balanced by Valuation concerns. We continue to monitor the data closely and will communicate any changes accordingly
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