Roaring 20s or Slowdown Ahead?

As the reopening of the US economy continues, Vaughan Nelson’s Chris Wallis looks at sustainability of economic and equity market growth.

As the Covid-19 vaccination rollout continues to help progress the reopening of the US and other countries, Chris Wallis, CEO, Portfolio Manager at Vaughan Nelson Investment Management, assesses the strength of equity markets and certain sectors going forward. He also shares insight on how President Biden’s infrastructure plans might inject further growth into the US economy.

  • It’s understandable why a lot of investors consider the current environment similar to the Roaring ‘20s. There has been an incredibly strong rally; we are probably seeing the best economic growth numbers we may see in a lifetime. But we are reasonably far advanced from a reopening standpoint.
  • Currently, over the short term, volatility has continued to fall across key sectors: small caps, tech, industrials, and energy. Cross-asset volatility has been very much supportive of equity fundamentals.
  • That said, it’s clear we are going to have a peak in industrial growth later this year.
  • We’ll probably start to see industrial's rate of improvement peak. Strong growth out of the services side of the economy should continue.
  • Infrastructure is going to be a key part of real economic growth well into the future.
  • Even if Congress passes this infrastructure bill later in the third or fourth quarter of 2021, those funds really won’t begin to hit the real economy until well into 2022.
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This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. The views and opinions expressed are as of April 26, 2021 and may change based on market and other conditions.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

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