Earnings Overshadowed By Geopolitical Issues

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Market Flash

In another turbulent week on markets, geopolitical issues like Saudi Arabia, Brexit and Italy overshadowed better-than-expected results as the earnings season kicked off. Italian government bond spreads moved to 3.4% vs. the German Bund and Italy’s tussle with the European Commission sparked concerns as Rome seemed clearly intent on defying EU rules. The ongoing correction has brought market variations closer to their 10-year median. The global economic cycle does not look like running out of steam for at least 12-18 months, and certainly not in the US. That is why we view this correction as fleeting. We have already started to take advantage of some price falls to tactically reinforce our equity exposure.