29 Jun Viewpoints July 2021
PASSING THE BATON
The stock and bond markets look ahead at least six months, discounting what investors think are the most likely outcomes for growth, inflation and other key inputs. So it is critical to differentiate between what is likely behind us, what is the current state of affairs, and how things will likely differ six-to-12 months from now. COVID-19 has increasingly become a non-issue to the markets, as more vaccinations are leading to reopening in the West and even struggling countries like India and Brazil have registered double-digit equity market gains. The current economy features red-hot growth and surging prices. Growth hasn’t been a market concern, as high savings rates, low capital expenditures and ongoing reopening have underpinned investor confidence. This has left plenty of attention to be trained on the outlook for inflation – and investors need to assess more than just forecasts. Read the full Viewpoints July 2021 newsletter.