Industry Voice: Positioning for a new economic landscape

Recovery is on track, but inflation pressures create risks.

clock • 3 min read
Industry Voice: Positioning for a new economic landscape

The strengthening economic recovery from the coronavirus pandemic appears poised to broaden across regions and countries in the second half of 2021, bolstered by vaccine progress, continued fiscal and monetary stimulus, and pent‑up consumer demand.

But this new economic landscape poses a number of critical questions for investors. A key one is whether growth will be strong enough to meet optimistic earnings expectations without fueling sustained inflationary pressures - the kind that could force the US Federal Reserve and other central banks to speed up a turn toward tighter monetary policy.

"To make the case that broad equity valuations are attractive, you have to rely on an argument that there's no practical alternative," says Robert Sharps, president, head of Investments, and group chief investment officer (CIO). "That would rest on a continuation of low interest rates and low inflation."

 

 

 

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