We note that interest rates are now above where they were when the pandemic began; the economy is sitting on many trillions of newly-created dollars; and analysts are vying for more aggressive 2020 GDP growth targets. Even the Federal Reserve is raising its growth targets, and while the majority of members of the Fed board see no liftoff in rates any time soon, the set of opinions about the future trajectory of the Fed funds rate has certainly shifted since the previous FOMC meeting.
Mr Powell may not yet be thinking about thinking about raising rates… but a few FOMC members are.
As we noted above, we believe that the market’s recent corrective action on the pandemic’s best outperformers suggests that a rotation is underway from the pandemic tech winners towards mid-cycle inflation beneficiaries. Whatever the massaged statistics presented to reduce inflation expectations, inflation is here and will continue, and the market knows it.
Thanks for listening; we welcome your calls and questions.
