Now What? October 2021 | ETF Trends

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Last month, we thought that global monetary policy would dominate financial market headlines. The September U.S. Federal Reserve (“Fed”) meeting did not provide any new information, and the general assumption remains that the Fed will announce its asset purchases reduction plan during its November 2021 meeting. Other central banks, such as the Bank of England, hinted at raising short-term interest rates sooner than market expectations. In our opinion, changes to monetary policy are the most significant known risk in financial markets today. As we head into October, we think corporate earnings will be the main story, while the inflation debate becomes less loud.

Decelerating at high speeds

Last quarter, U.S. equities exhibited an astonishing 91% earnings growth relative to the second quarter of 2020. A portion of that growth is due to a low starting point, but the extraordinary amount of monetary and fiscal stimulus likely contributed. This quarter,…

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