Defying apparent economic fundamentals, sentiment has driven erratic equity market swings this year.

It’s our view that U.S. equity market performance this year has been driven more by sentiment than hard data. From a certain perspective, fundamentals—especially the declining discount rate—actually support a bullish outlook. Yet soft indicators are sending mixed signals. And another wild card is about to be played: a U.S. electoral cycle that is likely to be stormy.

Tactical investors should remain generally defensive, with a focus on alpha over beta, but should look to capitalize on volatility when it heightens, as it likely will in the coming months when the 2020 U.S. presidential campaign season ramps up.

Election calendar important dates

Source: The New York Times
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