We’ve heard a lot in the news about the re-emergence of inflationary worries, but investors appear to have made a collective decision not to take fright. They sending the markets higher, apparently in the unconscious belief that equity gains can outpace inflation.
The NASDAQ and S&P both started this week on an up note, and both indexes have shown solid year-to-date gains – ~11% on the NASDAQ, and 13% on the S&P. This is clearly outpacing the roughly 6% annualized inflationary trend.
Chiming in on the situation from Credit Suisse, chief US equity strategist Jonathan Golub lists several reasons for keeping a bullish attitude on stocks. Key among his list are the steady increase in economic activity and the high levels in both share price growth and reported EPS.
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