By David Bailin
Chief Investment Officer
August 10, 2020Posted InInvestment Strategy
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We are increasingly optimistic on the state of the business cycle and growth prospects for 2021 and 2022. We recommend positioning accordingly.
Consumer goods inventories are plummeting in the US and elsewhere. Thus, we believe a larger recovery in industrial activity and trade is likely on the horizon. We have raised expected global GDP growth rates for 2021 and 2022 along with corporate profit estimates in line with this view.
The sharp economic rebound from the March/April shutdown across the world is over. While the US added 1.8 million jobs in July, this is likely to be the largest gain for some time. Accordingly, we have revised down 2020 global GDP growth slightly.
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An effective vaccine and/or monoclonal antibody remedy is likely to be announced 1H2021. Cyclical industries and most small and mid-cap stocks are not priced for the ensuing economic rebound. History suggests that the US Congress has “written the book on brinkmanship’. We continue to expect Congressional action to support the US recovery.