After a pullback early in the year, absolute results began to rebound in June and that trend continued throughout the third quarter. 2018 has been a year characterized by fiscal stimulus which has driven a late cycle earnings acceleration and contributed to a rise in interest rates. In conjunction, there has been U.S. dollar strength which has been a negative for both U.S. and non-U.S. domiciled multinationals, and especially for emerging markets. Finally, 9 ½ years into this bull market and 7 years removed from price/earnings ratio lows, this has remained more of a momentum-driven than a valuation sensitive market. Overall, these phenomena have worked as a headwind to the fundamental appeal of our concentrated quality growth approach.
To read more, download the full HSMP 3Q 2018 Investment Perspective.