Capital Markets: Observations & Insights

Key Observations and Themes

The Election In our view, evidence suggests investing in innovation and fundamentals is likely to outperform strategies that attempt to profit from policy changes.

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I

Accelerating Innovation Innovation is speeding up and changing the way the economy behaves, increasingly driving stock performance.

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II

Style Wars Powerful structural forces have caused Growth to diverge from Value. Investors looking for a reversion to the mean may be disappointed.

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III

Lending vs. Owning With interest rates at low levels, stocks look attractive relative to bonds. We believe equities will outperform fixed income over the long term.

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IV

Economic Outlook Low interest rates and improving confidence may combine for an improvement in economic growth.

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V

Valuation Equities may appear expensive but after accounting for low interest rates and changing business models, they may look more attractive.

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VI

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