The prospect of rising interest rates is already changing the shape of the market. Small and mid caps have lost their shine and more defensive sectors look to have better prospects
When the Federal Reserve says it intends to keep policy on hold for a considerable period there is little reason to doubt it. But when circumstances change, intentions change. A sustainable expansion is emerging in the US and the recovery phase, which began some eight quarters ago, will shortly become passé, as will the Fed's policy of monetary accommodation. There are five reasons for this. First, corporate profits are growing and have been growing since the second quarter of 2002. Second, they are growing faster than expected partly because sales growth is strengthening. Third, aside fr...
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