Market & Topical Perspectives

3Q21 Market Overview: Against Perfection

3Q21 Market Overview: Against Perfection

Equity market dynamics in third quarter 2021 suggested to us that investor confidence may have begun to wane even as widespread vaccine distribution prompted many jurisdictions to adapt their approach to managing the risk of Covid-19. While the MSCI World Index was flattish for the three-month period, September’s decline—the first down month for the index since January—highlighted the challenges that may be ahead for investors.

Key Takeaways

  • Key-Takeaway

    While equity valuations suggest little room for error, mounting input cost pressures threaten the very high profit margins that have supported corporate earnings growth.

  • Key-Takeaway

    With “transitory” inflationary pressures proving to be quite persistent, the Federal Reserve has grown increasingly hawkish. With tapering and rate hikes on policymaker radars, caution may be warranted in an environment of uncertain future liquidity.

  • Key-Takeaway

    China’s re-embrace of “common prosperity” may improve the country’s socioeconomic balance, but a sweeping realignment of power between the government and business risks upsetting a private sector that has been key to economic and job growth, with unknown potential impacts on the country’s—and the world’s—economic trajectory.

  • Key-Takeaway

    We continue to position our portfolios for resilience from the bottom up, targeting companies that we believe offer the opportunity for durable wealth creation over the long term.