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Investment strategy
March 28, 2021
2 mins

Go big or go home

March 28, 2021
2 mins
David Bailin
Chief Investment Officer
Steven Wieting
Construction workers building structure

The Biden administration's large-scale spending plans could have a significant impact on growth, infrastructure, and taxes. We look for the New Economic Recovery to continue and see further opportunities in cyclical value equities.

President Biden sees the damage from the Pandemic and America’s declining global power as a crisis comparable to that faced by Roosevelt in 1933. Recently, he met with eminent historians to learn what other US Presidents did successfully to redirect America’s economy toward growth and a greater sense of possibility in its workforce. Thus, his second transformative legislative package is set to be introduced this coming week and it is huge. This Bulletin begins to assess the scope and impacts of Biden’s New Deal. 

Recent equity market action underscores the impact of higher rates on growth equities. The same is true in China which we also discuss herein. But even as a second stimulus bill could be a further boon for overall US employment and corporate earnings growth, we think skeptical investors underappreciate the speed with which the US, Chinese and global reopening will occur over the next six months based just on the Covid stimulus package and Chinese policy.

While the recent rotation from growth and into value cyclicals has been strong, it is not nearly complete. Some investors need to see the recoverybefore they buy into the realities of the New Economic Recovery, perhaps missing out on a significant portion of this cyclical and we think, powerful, rally underway.

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