• The economic recovery that has been driving market returns will fade at some point and take a new course – but we are at odds with what the market is expecting.
  • The demand impulse is slowing, inflation is likely peaking, and Fed policy is reflecting the potential for rate hikes in 2023. China’s credit cycle is cooling and central banks around the world are starting to slow their asset purchases.
  • While we’ve been programmed to fade the growth trade when these inputs peak, things might be different this time around. Previous episodes of peak growth momentum have occurred with significant slack still left in the economy, and actual GDP running below projected potential GDP.
  • But according to estimates, the US economy is expected to be running above potential by year end something we haven’t seen in almost 15 years. Maybe this time we plateau back to a level that remains elevated above the long-term trends we are accustomed to.
CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

This material is provided for informational purposes only and should not be construed as investment advice.

The views and opinions expressed are as of July 2021 and may change based on market and other conditions.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed-income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Actual results may vary.

Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.


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