President-elect Trump and the specter of his spendthrift policy proposals have generated significant client interest/inquiries on equities and inflation – not asset prices, but of the more traditional kind: consumer price inflation.
The chart shows that a little bit of inflation would be positive for the broad equity market, further fueling the high-risk, liquidity-driven blow off phase. However, when inflation reaches 3.7%-4%, the broad equity market hits the brakes.
Sizeable tax cuts, increased infrastructure and defense spending (i.e. loose fiscal policy), protectionism and a tougher stance on immigration are inherently inflationary policies (and bond price negative) ceteris paribus. However, our working assumption is that in the next 9-12 months, CPI headline inflation will only renormalize, rather than surge.
The purpose of this Special Report is to serve as a global equity sector positioning roadmap given the budding inflationary backdrop.
Historically, inflation is synonymous with…
For additional details, please access the report titled “Global Equity Sector Winners And Losers When Inflation Climbs” at gss.bcaresearch.com.