Valuations suggest that US stocks are priced for perfection. We suggest allocating globally within public equities. Bonds appear to be priced for near zero returns over the next 10 years as well. Even private equity in the US is looking to yield very little.
The US economic environment remains in a slowdown, having peaked in late 2018.
Market sentiment is positive with international equities and domestic equities positive on a majority of time periods. Domestic and international equities are also outperforming the risk free asset over a majority of time frames.
The Federal Reserve is easing policy and global liquidity is picking up. The Fed Funds rate is back below the 2 year yield and the curve is no longer inverted. Easing has worked so far to stir up the animal spirits and shift sentiment.
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