Tactical Asset Allocation

Global growth momentum continues to soften on the margin but remains broadly stable. However, our leading indicators are now flagging the potential for cyclical divergence in favor of Europe and emerging markets relative to the United States, a development we have not seen since Q1 and unlikely to be discounted by market consensus. Following last month, leading indicators for the United States reported additional weakness in consumer sentiment surveys, manufacturing business surveys, and industrial orders, while housing indicators remained stable.