Key takeaways

• Developed equity markets recorded strong gains in the third quarter, as the S&P 500 advanced
by more than 5%. This marks the strongest year-to-date gain through three quarters (+20.8%) for
the blue-chip index since 1997. Notably, the third quarter also witnessed changes in leadership
within global equities. Thanks to a strong end of the quarter by Chinese stocks, Asia ex-Japan
and emerging market equities outperformed developed markets. Global value stocks and smallcaps
outperformed growth stocks as the "Magnificent 7" lost some of their shine.
On a year-todate basis, Bitcoin and gold remain by far the best-performing assets, while bonds and
global commodities continue to lag.
• In the first section of this publication, we review the top 10 stories from the past quarter. We then
present the key takeaways from our latest Tactical Asset Allocation Committee meeting. While the
macroeconomic environment remains broadly supportive of equity markets, regional variations are
emerging. The U.S. economy continues to demonstrate remarkable resilience, while Europe faces
slowing growth. The risk of stagnation or a mild recession is increasing in Europe but remains low in
the U.S. Meanwhile, inflation is decelerating globally as central banks have now begun their tapering
cycle. The market is pricing in strong upside for 2025 earnings. Equity valuations remain expensive,
with both the S&P 500 and its equal-weighted counterpart at recent highs. Some risks, such as
those related to the Middle East, U.S. election uncertainty, and the unwinding of the yen carry
trade, seem underpriced.
• A few weeks ahead of the U.S. Presidential elections, the race remains highly uncertain, with both
candidates neck and neck in the polls. The debates, along with recent events such as Joe Biden's
health issues and assassination attempts on Donald Trump, have added to the unpredictability of
this election, which could significantly impact the U.S. economy and financial markets. Let's explore
the key issues at stake and how the election outcome may affect equity and bond investments.
• We then turn to our home country to discuss the "Swiss miracle." Despite challenges posed by a
strong currency, Switzerland's economy remains robust, with significant industrial growth driven by
specialised sectors. This resilience contrasts with stagnation seen in many neighbouring countries.
• The last section focuses on the rise of stablecoins. In recent years, this specific segment of
cryptocurrencies has significantly transformed the landscape of digital finance, with over $170
billion of these digital assets now held globally.