Ignore the bouncing ball. As valuations in the major indices jump around following events like the Brexit or central bank announcements, one asset manager says the global economy has moved mostly sideways.

In “The New Mediocre,” Seattle-based Russell Investments’ third-quarter update to its 2016 “Global Market Outlook,” the firm says that “noise”—rather than fundamentals—drove the equity market volatility that punctuated the first half of the year. Yet the firm remains cautious moving forward because of the weakening global business cycle.

In an update released Wednesday morning, Russell envisions overpriced U.S. equities, weakening cycle fundamentals in developed markets, and flat or negative market momentum moving forward.

The Brexit vote will have negative repercussions for the British and European economies, says Russell, but Britain’s decision to leave the EU will have a muted impact elsewhere in the world.

Russell argues that central bank policy is likely to be the most dominant driver of the global economy for the rest of the year.

“Global divergence continues to be a dominant theme,” writes Russell. “The European Central Bank is purchasing corporate bonds, and there is speculation that the Bank of Japan is moving towards money-enhanced government spending. The Fed may be moving a bit more slowly than we had anticipated at the beginning of 2016. However, in our view, the steady tightening of the labor market will put enough upward pressure on inflation to trigger one Fed rate hike in the second half of the year.”

The risks for recession moving forward remain low, say Russell’s strategists, but the stronger U.S. dollar will be a headwind against growth.

Russell writes that cautious central bank policy will likely offset the stronger dollar, and that the worst of the corporate profit downturn may now have passed. Yet the firm continues to resist adding U.S. equities to its portfolios, mainly because they aren’t good values.

“The combination of expensive valuations and lackluster earnings leads us to have an underweight preference toward the U.S. equity market in global portfolios,” says the report. “Within U.S. equities, we see ‘quality’ stocks as offering good value, and the consistent earnings power of these businesses is likely to be advantageous in the current economic environment.”

U.S. earnings-per-share growth has started to improve, but Russell says that growth will remain at or below zero for the rest of the year. That’s a revision downward from expectations of 3 to 5 percent EPS growth at the beginning of the year.