Investment Insights

Investment Insights: Market Commentary - April 2021

14 April 2021

With unparalleled fiscal and monetary support and progress with vaccines and therapeutics serving as a bridge to pre-COVID norms, we believe that economies and markets are poised for liftoff. However, selection is ever more important and wise investment strategy and portfolio construction should also be synchronized. In this quarter’s commentary we explore the impact of stimulus measures around the globe, resiliency of consumers and we answer the question --- Is the balance portfolio dead?

  1. We are amidst a synchronized global economic lift-off as vaccinations are getting us closer to herd immunity and fiscal and monetary stimulus is moving from a rescue- to stimulus-mode.
  2. However, the economy isn’t the stock market and the stock market isn’t the economy. We need to consider what this means for the investment markets.
  3. Growing economies and healthy inflation bode well for risk assets, such as equities, particularly value-oriented companies. The latter refers to cyclical growth as opposed to defensive value. As such, markets have started a variety of rotations, including from big growth companies to value.
  4. A $1.9 trillion American Rescue Plan was approved in the first quarter and now we are digesting the American Jobs Plan – a $2.3 trillion proposed stimulus program with constructive and historical elements.
  5. Is the traditional balanced portfolio of stocks and bonds dead? This is a question we analyze, demystify, and propose recommendations for.
  6. We expect markets to embrace a risk-on environment. We believe equities – particularly value, international and selective clean energy - convertibles, global infrastructure, munis and credit-sensitive debt are particularly well-positioned.
  7. While economies and markets should continue to advance, they will most likely do so at a slower pace and with less volatility.
  8. We are now beyond the valley of COVID despair, approaching norms and the next economic peak. As the famous Police song, Synchroncity suggests, “A connecting principle, Linked to the invisible, Almost imperceptible.” We are all connected in battling COVID-19 and in the economic liftoff following.

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