The S&P 500 inched up another 1.2% last week and, according to a Barron’s article by Bob Doll of Nuveen Asset Management, while equities are expensive on a historical basis they are still an attractive alternative to bonds and cash.

Doll outlines his take on current market conditions:

• The Fed will probably raise rates in December, provided “economic growth remains on track and the global financial system does not endure an additional shock.”
• U.S. inflation is “slowly creeping higher.”
• Economic growth in 2017 may resemble that of 2016, but he predicts that growth next year could be even slower.
• U.S. equities appear more attractive than international stocks given better domestic economic growth, stronger earnings trends and more supportive monetary policy.
• The political environment in the U.S. seems to be a “mixed bag” for equities. Clinton’s policies, says Doll, offer “more clarity and continuity, which would be a net positive for equity markets.” Both candidates, however, “have adopted anti-globalization and anti-free-trade policies. That’s not great news for stocks,” he argues.

Doll predicts that equities “will likely improve against a backdrop of record-low interest rates and modestly improving growth,” although a Fed rate hike in December could “jolt” the markets. While he believes that investor caution is understandable, he expects equity prices to continue “grinding slowly higher” over the coming year.