Tactical Investment Strategy, June 2021

June 9, 2021 — We continue to see further upside for risk assets in the second half of 2021. Our base case includes strong growth driven by a continued reopening of the global economy, a healthy consumer, and favorable policy that will push equities higher and keep spreads stable. We expect the Fed to remain patient and carefully prep markets for a gradual tapering process by year-end. Inflation and higher rates will remain possible headwinds, but inflation concerns have receded somewhat, and inflation readings in the second half will be coming off a higher base and appear less threatening. Beyond rates and inflation, we would add tax concerns and valuations as the other primary risks for the back half. Fears of higher corporate taxes may weigh on mega-cap growth/tech-oriented companies, which feeds into our preference for value.