The main takeaway from our meetings with institutional and individual investors in the UK last week was the level of bewilderment as to how the US markets have been able to decouple from the political drama in Washington. The president’s approval rating remains historically low, yet the equity markets, confidence, and manufacturing sentiment are at a cycle high. This solid confidence remains despite the almost certain Fed rate hike later this month, near inversion of the yield curve, and coming midterm elections. There is no doubt these potentially disruptive influences could cause increased volatility in the weeks ahead given the move to new highs and drop in volatility, but the data and history show that any pullback – no matter how nasty – should prove temporary.




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