Capital Markets: Observations & Insights

Performance

Prices and Fundamentals Converge

• Last year, stock prices and fundamentals diverged as investors positioned for perceived changes following the U.S. presidential election • This year fundamentals took center stage again, which has been reflected in stock prices

Growth Relative to Value

110.0

Stock Prices

Fundamentals

Convergence

105.0

Disconnect

100.0

95.0

90.0

Jul-16

Jul-17

Oct-16

Apr-17

Jun-16

Jan-17

Jun-17

Feb-17

Mar-17

Aug-16

Sep-16

Nov-16

Dec-16

Aug-17

Sep-17

May-17

Source: FactSet as of 9/30/2017. S&P 500 Growth and Value Indices used to represent Growth and Value stocks. Fundamentals are LTM EPS.

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