Investment Perspectives: from reflation to inflation?

Financial markets have already travelled a long way since the start of the year. The pandemic and the nascent recovery from it, have rocked the fundamentals that underlie asset prices across the board. With headlines increasingly focused on market frenzies (GameStop, SPACs, non-fungible tokens, Dogecoin,..), investor fears are poles asunder: some fear that prices will suddenly drop back to Earth; some fear further disconnection from intrinsic values, rendering pricing models obsolete.

After a decade of worries about inadequate demand and spending power, signs of insufficient supply are now emerging, threatening to constrain growth and heralding the return of inflation. Could it be that central banks have shaken the bottle for too long, leading the ketchup to come out all at once in an inflationary rush? Could higher inflation be the spark for a market pullback?

If you missed our Midyear Outlook webinar, you can watch the replay here: