by David Picton and Team, Picton Mahoney Asset Management
Overview
Stock markets have rallied dramatically over the past year, driven by unprecedented monetary and fiscal stimulus, the beginnings of a surge in the global economy and significant asset inflows. Bullish sentiment is extended, but the optimism is warranted, given the unprecedented backdrop that currently exists for risk assets. However, over the next year stock markets will have to deal with hurdles such as rising interest rates, along with decelerating stimulus and economic growth measures. Given that we are still early in a new economic cycle, we expect that stock market pullbacks be contained, and that investors would therefore continue to buy on pullbacks. However, a significant increase in longer-term inflation expectations that would suddenly drive interest rates higher would cause us to revisit this positive outlook.
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