Chris Wood in his weekly newsletter, Greed & Fear suggests to stick with GREED & fear’s already recommended trades, namely to be long cyclical stocks and short Treasury bonds. As per Chris, it may be consensus. He says that it remains the case that, if there is going to be a tapering scare, it is likely to come after Treasuries have sold off more and cyclical stocks have rallied more. In the meantime there is no sign for now, in America at least, of the policy that could short circuit this dynamic; namely yield curve control.
As per Chris, Meanwhile a sudden surge in demand, in an economy which has been hit by a supply shock, is a classic recipe for a pickup in inflation.
Key Takeaways :
• Advice to be long cyclical stocks and short Treasury bonds
• Cyclical rebound will continue to surprise on the upside
• This will be lead by pent-up demand potential
• As vaccine rollout proceeds triggers massive pent-up demand will play uot
• American household savings appear to be very concentrated
• GREED & fear’s view, are also likely to spend a lot of the money they will now receive.
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