Navigating a less 'tranquil' year for US equities

There has been a pick-up in volatility in the US market this year after an abnormally tranquil 2017. Concerns about the end of the cycle are mounting amid rising US interest rates and higher inflation and the end of quantitative easing.

Despite this, US earnings sentiment remains strong and profit margins have improved to record levels. Valuations for the broad US equity market have derated this year and in absolute terms are at fair value relative to historical ranges. However, large differences in valuations persist both across and within sectors.  Global markets tumble as Trump announces tariffs for China The large valuation dispersion partly reflects the strong performance of technology stocks and the relative underperformance of defensive sectors - in particular, bond proxies, which are vulnerable to rising bond...