Where’s the Value in This Phase of the Recovery?

Delta variant factor, where to look for attractive valuations globally, and energy are covered in this market outlook.

Chris Wallis, CEO, CIO and Senior Portfolio Manager at Vaughan Nelson Investment Management, takes a look at the recovery phase, where it’s accelerating and slowing down, and what sectors may be offering attractive opportunities in the back half of 2021. Here are a few highlights:

  • As you look at where we are in the actual recovery phase, we are already past the opening in North America, Europe is still accelerating, and Asia is already on the downside.
  • We can’t underestimate the four million people that are still out of work in the US as they deal with long-haul Covid symptoms.
  • I would lean more internationally and on the small and midsize of international, as they are still in the midst of an accelerating recovery and have very dynamic companies as well as attractive valuations.
  • Energy is on a unique cycle. It came into the pandemic with significant underinvestment for a number of years. And investors have shied away from the space for ESG reasons or the thought that the economy is going to go green sooner than many anticipated.
  • We are probably going to see the higher oil and natural gas prices we saw during the first half of the year be sustained at their current levels.
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