April 29, 2021
For anyone who has enjoyed the big rally in tech shares after the rough February through March period, JP Morgan has bad news for you. The bank says that while the reflation and “reopening” trade has paused for the last month, it is poised to resume. This would rotate capital out of growth and quality into cyclicals and value, which could pose big trouble for FAANGs and other tech funds. According to the bank, “With U.S. and Europe cases now declining, the fast pace of vaccination and seasonal tailwinds (Northern Hemisphere), we believe that the reopening and reflation trade will resume with a move that will be bigger than we saw early this year… As the COVID-19 recovery takes place, reopening, reflation and inflation themes, and value likely will significantly outperform growth and defensives”.
(New York)
FINSUM + Magnifi: It is worthwhile thinking, but we cannot say we agree, at least as it regards weakness for growth/tech stocks. The Fed has maintained extreme dovishness, so we think there will be an effective cap on yields. In that way, we could see a goldilocks market where value moves higher and so does growth.
Other news today: Chinese Stocks are Big Winners Despite Delistings and There’s a Global Chip Shortage but These Two Chipmakers are in Prime Position
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