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.

Russell says that it is still looking for buying opportunities during dips and selling opportunities during rallies. Thus far, the volatility from Brexit has not created attractive-enough buying opportunities for Russell’s process.

“Even after the post-Brexit vote volatility, the U.S. market is not far from near-record highs, and long-term yields have trended lower,” writes Russell. “The mix of equity market optimism and bond market pessimism looks unsustainable, and our investment strategy process is warning us to be cautious.”

Russell has downgraded its business cycle outlook in Europe as well. The European economy is improving, and British and European businesses should get a tailwind from the currency declines. But the continued uncertainty caused by the Brexit will likely mean continued volatility.

In Asia, Japan’s “safe haven” status will put upward pressure on the yen and downward pressure on the business cycle outlook, but improving valuations will offset these trends, said Russell.

Russell remains cautious about emerging markets, which face two opposing trends: a stronger U.S. dollar that should help and lower commodity prices that will hurt.

Regardless, Russell expects that the world’s major currencies will stay in the ranges they have traded in since the beginning of the year, with even the dollar remaining at or near the top of that range.