The next chapter for growth and value

The valuation premium attached to “growth” stocks over their “value” peers is exceptionally large at present across major equity markets – much larger than during the 2010s – which is one reason why we suspect that value will outperform growth significantly over the next couple of years.
Oliver Jones Senior Markets Economist
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Asset Allocation Update

Energy, inflation and asset allocation

We doubt that the recent surge in energy prices will be sustained, but still think that investors are underestimating the likely strength of broader price pressures in the US over the next few years. This Update explains our view, puts it in historical context, and considers the implications for asset allocation.

15 October 2021

Asset Allocation Update

Correlation between US equities & Treasuries not set in stone

While many observers seem to have been surprised by last month’s joint sell-off in US equities and Treasuries, there is no reason in principle why the two assets should be negatively correlated. It all depends on the economic and policy backdrop. Our view is that future returns from both will disappoint.

11 October 2021

Asset Allocation Update

Infrastructure & reconciliation unlikely to mean Q1 rerun

While the large fiscal stimulus passed in the US in the first quarter of this year appears to have been a key reason why equities there outperformed Treasuries at the time, we think that the infrastructure and reconciliation bills currently making their way through Congress point in the opposite direction.

6 October 2021

More from Oliver Jones

Capital Daily

Why Treasury yields could keep rising

We are not surprised at the recent jump in US Treasury yields – we argued in the summer that their prior fall was overdone, and think that they have further to rise over the next two years.

28 September 2021

Asset Allocation Update

How Evergrande fits into our asset allocation outlook

You don’t have to believe that Evergrande’s troubles are the start of a financial crisis in China to think that the risky assets most sensitive to developments there will struggle in the next few years. Even an orderly restructuring of the developer, plus policymakers quickly doing enough to limit distress across the financial system – still the most likely outcome in our view – would probably not prevent much more weakness in construction activity. And in the meantime, other, unrelated, headwinds seem to be building.

23 September 2021

Capital Daily

Does the market-implied path of US inflation make sense?

Although the US CPI data published today showed core inflation dropping back by a little more than widely anticipated in August, we still think that investors are underestimating the likely strength of price pressures there further down the line.

14 September 2021
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