Risks are rising: the Fed must thread a narrowing needle-eye to stop inflation without causing a recession.
Despite our view that a U.S. economic contraction is avoidable in the near term, the outlook for equities has deteriorated since the beginning of the year...
We see scope for continued global equity gains as the impacts from Covid, policy stimulus and inflation diminish.
Risks are rising: the Fed must thread a narrowing needle-eye to stop inflation without causing a recession. We’ve lightened equity positioning and reduced risk within fixed income segments of portfolios.
Despite our view that a U.S. economic contraction is avoidable in the near term, the outlook for equities has deteriorated since the beginning of the year and we think this sour spot is likely to last as monetary policy becomes tighter.
We see scope for continued global equity gains as the impacts from Covid, policy stimulus and inflation diminish. The current balance of market factors keeps us overweight U.S. large cap stocks.
Though the inflation debate continues, we concur with the Federal Reserve that price increases will be manageable. We believe the Fed can conduct monetary operations along its well communicated path, paving the way for reaccelerating, above-trend 4Q21 real GDP growth.
We have strong conviction that the U.S. and global economic expansion will continue at an above trend pace this year, and that growth will persist into 2022.
The U.S. economic outlook continues to strengthen, with accelerating vaccinations, broadening activity and government support. The global economy should accelerate, but with less certainty due to uneven vaccination progress across countries.
We believe the economy will grow well above trend throughout 2021, as massive pent-up consumer demand is released by vaccination progress, states reopening and highly accommodative government policy.
Our outlook continues to be that economic recovery is in the offing and will broaden into synchronous, global expansion. Segments of the economy that were protected from the pandemic should stay in a healthy holding pattern.
With two COVID-19 vaccines approved in the U.S. and more fiscal stimulus about to be deployed, there is a clear bridge (vaccine) to post-COVID normalcy and abutments (stimulus) that should keep the recovery on course.
Despite the recent coronavirus surge and probable upcoming socially isolating, winter hunkering required, we think stocks can continue to hold their own against bonds.