Investment Insights

Investment Insights: Market Commentary - July 2021

21 July 2021

As we traverse the early stages of post-COVID economic recovery, we are witnessing a broadening in economic growth from just a few industries to many. Governments and central banks have orchestrated fiscal and monetary stimulus with the hopes that a handoff to the consumer and corporations, which power economies, is effective for the long run.

  1. We have transitioned from a global economic lift-off spurred by unprecedented monetary and fiscal policies to a handoff to well-positioned consumers and corporate America.
  2. We are only in year two of an economic expansion that generally continues for five to eight years.
  3. Concerns for unemployment levels have transitioned to concerns to find enough workers. A better problem to face.
  4. Concerns for domestic equity valuations are being chipped away by very robust corporate earnings.
  5. The baseline case for inflationary concerns is that they are focused on sectors that have been most disrupted or face supply chain problems. We agree with the Federal Reserve that higher inflation rates of late are transitory.
  6. We expect markets to embrace a risk-on environment. We believe equities – particularly value, some small cap sectors, international and selective clean energy are particularly well-positioned.
  7. While the domestic equity market averages approximately six pullbacks of at least 5%, we haven’t had any yet this year. Expect that volatility could potentially increase, but don’t run from it.

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