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Summit Push
The S&P 500 hit a new record on Friday.
Some readers (most, I hope) will recall that as US equities melted up in December, extending gains after a rollicking November rush, I repeatedly suggested that notwithstanding stretched positioning across key systematic investor cohorts, massive inflows to US equity-focused ETFs and mutual funds and the most bullish individual investor sentiment of the year, a meaningful drawdown was unlikely in the near- to medium-term.
The reasoning was simple: A
The majority of Americans seem to be okay with rates at current levels — they’re spending, and it’s what most of us are used to. The job market is hanging in. And inflation is still too high. So, higher for longer.
So what will work in an ‘inflation re-acceleration / no cuts’ scenario? Perhaps we should look for names that are cyclical, inflation beneficiaries, not debt-burdened, and short duration.