3 Keys to the 2021 Second Half: The Macro Picture | Lord Abbett
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Economic Insights

Lord Abbett Portfolio Manager Jeffrey Herzog looks at three factors that could influence markets and economies in the second half of 2021. 


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[LOWER THIRD: Jeffrey Herzog, Ph.D., Portfolio Manager] I’m Jeff Herzog, a multi asset portfolio manager here at Lord Abbett. I’m here to talk to you about three major themes were looking at the second half of 2021.

[LOWER THIRD: Key #1: Corporate earnings growth.] First, we're closely watching earnings. Stocks and risk assets have responded positively to a revival in capital spending and economic activity. The question asked now is whether the post-COVID world offers opportunities to continue growing earnings faster than currently expected by the market.

[LOWER THIRD: Key #2: Movements in interest rates and inflation.] The second major theme we're watching is inflation and interest rates. We will also be closely watching to see if inflation is temporary or permanently high. Persistent high inflation is an outcome that markets are not really prepared for right now, in our view; it has strong implications for across asset classes and for asset allocation. The biggest issue is, of course, the high interest rates sensitivity of a large part of the S&P 500. So Treasury yields [LOWER THIRD: “S&P 500” refers to the S&P 500® Index. “Treasuries” refers to U.S. Treasury securities.] move higher to reflect permanently higher inflation, this will negatively impact growth equity factor exposures.

[LOWER THIRD: Key #3: Developments in U.S. fiscal policy.] The last issue that we are closely following is U.S. fiscal policy, which impacts not only the U.S., but also other countries. We've already seen a considerable amount of government support for the economy. But a fully equipped infrastructure bill would greatly improve U.S. productivity and also help offset any fiscal drag coming from expiring coronavirus support programs that we will see in early 2022.


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thank you for listening.


Unless otherwise noted, all discussions are based on U.S. markets and U.S. monetary and fiscal policies.

Asset allocation or diversification does not guarantee a profit or protect against loss in declining markets.

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Copyright © 2021 Lord, Abbett & Co. LLC. All rights reserved. Lord Abbett mutual funds are distributed by Lord Abbett Distributor LLC.



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