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U.S. equities moved higher during the last week while bonds appeared to break out of consolidation higher.
The big question facing investors in the short to medium term is, “Is the Covid recovery trade fully factored into current equity and bond prices?” It seems that to a large degree, recovery is factored in. It seems less clear as to whether the effects of fiscal and monetary stimulus are fully factored in. The real economy is still very much in an adjustment phase as dollars continue to pour into the system. Anecdotally, demand appears to be increasing while supplies appear constricted in many sectors of the economy. Investors must be on the lookout for inflationary pressures.
The theme of current conditions creating winners and losers is very much alive. Covid has changed the business landscape and companies are rushing to adjust to the new reality. This can create opportunities for investors who are looking in the right places.
– Best
Cory Haupt
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