Schroders global investment commentary stated that they hold a positive view on stocks, especially as corporate earnings continue to improve. With interest rates starting to decline, emerging market stocks seem more attractive. Many emerging economies have controlled inflation, implemented prudent fiscal policies, and benefited from the current manufacturing recovery. Recently, investors have seen many worrying things in the headlines. From unexpected French elections to persistently high inflation, coupled with uncertainties such as the US presidential election, these issues have created a complex financial market environment. Therefore, it is crucial to focus on the most important factors in the financial markets and not be swayed by market noise. Schroders global investment pointed out that second quarter economic data continues to confirm expectations of a soft economic landing, with economic activity continuing and inflation moving in the right direction. Several major central banks worldwide have started cutting interest rates, including the Swiss National Bank, the Bank of Canada, and the European Central Bank. The bank expects the Bank of England to begin cutting rates in the summer of 2024, while the Federal Reserve may start cutting rates in the fall. This reinforces the bank's positive view on stocks, especially as corporate earnings continue to improve. Another concerning issue is the excessive concentration in stock market performance, mainly driven by tech stocks this year, with relatively high valuations (especially in the US). However, tech stocks' valuations continue to be supported by strong revenue streams and positive operating leverage (i.e. revenue growth exceeding cost growth). Entering 2024, there are concerns about elections around the world. Schroders global investment previously stated that political situations are crucial, as their effects often take months or even years to manifest, rather than days. In many cases, election results reflect dissatisfaction with the incumbent government, as seen in South Africa, India, France, and also the UK. There is a widespread questioning of political consensus. The bank believes this will prompt central banks to implement looser fiscal policies and tighter monetary policies globally. The system has already shifted away from the austerity fiscal policies and loose monetary policies of the past decade. Of course, the most important election is the upcoming US presidential election in November. Regardless of the outcome, protectionism is likely to remain a focus of US policy. Against the backdrop of wage growth and a strong labor market, local immigration policies will have a significant impact. The possibility of a Republican sweep (winning both houses of Congress and the presidency) has raised concerns in financial markets about expansionary fiscal policies, which could lead to rising long-term bond yields as investors worry about ongoing fiscal deficits. This may be one of the reasons why the bank believes the diversification benefits of government bonds may not be as strong as in the past. However, rate cuts are expected to benefit the bond yield curve, and fixed income continues to play an important role as a source of portfolio returns (the basic reason for holding bonds). With a simple investment strategy taken this year, returns have been positive so far as the mild economic growth environment favors the stock market. An inverted bond yield curve (short-term rates higher than long-term rates) suggests that bond investors may need to wait for better levels or clearer signs of impending economic recession.