Seasonal headwinds arrived, and together with political and systemic risk from China's Evergrande, have caused some benchmarks to have the worst month since last year, particularly amongst the small cap tranches. All in all, developed markets were broadly flat over the quarter, while Chinese issue dragged emerging markets down.
Commodities recorded its 14th monthly gain over the prior 17 months, setting in some cases such as the natural gas, the greatest annual gain since 1979 (+135% YTD), and spreading inflationary forces. Thus, the Fed Chair Jerome Powell said they could begin tapering with their next meeting in November, while first rate hike would likely begin after the taper process is complete, which could be by mid 2022.
Though expectations for ongoing earnings growth helps to support equity markets, there are reasons to be cautious. More than ever, we strongly believe the best way to protect any portfolio, is to build on a high quality set of stocks, combined with low duration and credit stories with room to improve on a fundamental basis.
