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. 

Transcript

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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.

Outro

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thank you for listening.

Disclosure

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.

No investing strategy can overcome all market volatility or guarantee future results.

Market forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.

The value of investments in fixed-income securities will change as interest rates fluctuate and in response to market movements. Generally, when interest rates rise, the prices of debt securities fall, and when interest rates fall, prices generally rise. The value of investments in equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies and/or sectors in the economy.

The information provided herein is not directed at any investor or category of investors and is provided solely as general information about our products and services and to otherwise provide general investment education. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as Lord, Abbett & Co LLC (and its affiliates, “Lord Abbett”) is not undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement investor, contact your financial advisor or other non-Lord Abbett fiduciary about whether any given investment idea, strategy, product, or service described herein may be appropriate for your circumstances.

The views and opinions expressed are as of the date of publication and are subject to change based on subsequent developments, and may not reflect the views of the firm as a whole. The information discussed is only for illustrative purposes and is intended to provide general investment education and is not intended to provide legal, tax or investment advice. It is not intended to be relied upon as a forecast or research regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment or serve as a recommendation or offer to buy or sell securities.

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

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