Reflation and Inflation: A Survival Guide for An(other) Unprecedented Year
Memories of the COVID pandemic are not fading as we continue to grapple with new outbreaks, but no longer can we refer to it as “last year’s problem.” Instead, we now need to make sense of how to interpret last year’s outsized economic data and its implications for an ongoing economic recovery.
We are two years removed from the unprecedented global economic shutdown and every stage of the recovery creates a new set of questions. What can we expect from the economy as the 2020 base effects roll off? Will the current trends of high inflation and high growth continue or will one, or both, see a reversal? Where do rates go from here? With so many questions, financial professionals can be tempted to adjust their portfolios in preparation for a certain outcome, but we on the Portfolio Construction and Strategy Team believe that having a nimble allocation with the introduction of flexible active management is the key to staying afloat as we discover what economic reality we are facing.