The reliance on multiples in equity performance.
Multiple expansion, namely rising price-to-earnings ratios, have been the principal contributor to global equity performance in 2019. Earnings growth has only been a modest contributor in the U.S. while detracting in other regions. Lower rates, symptomatic of monetary easing, are typically reflected in higher price-to-earnings ratios. The Federal Reserve has cut rates twice this year to cushion the economy. With rates already at historic lows, there is limited scope for further multiple expansion and increases the importance of earnings growth in driving further gains.