FYI: Equity markets esilience in the face of rising probabilities for rate hikes is
constructive, an acceptance of reflation; positive economic
surprises, improvement in earnings revisions and pockets
of modest valuations could provide the next leg up; Fed
credibility with the bond market remains a concern as yield
curves are flattening and real yields are falling; divergence
between stock and bond markets likely not sustainable;
anticipate resolution with bonds weakening, which could
spell trouble for the overvalued and overowned
low/minimum volatility stocks and strategies. Consider
assessing portfolios for interest rate sensitivity, preferring
shorter-duration bonds and selling expensive, low-beta
stocks.
Regards,
Ted
http://www.morganstanleyfa.com/public/projectfiles/gicweekly.pdf
