Jurrien Timmer, Director of Global Macro, notes that the shift from growth to value is continuing, alongside a noticeable shift from large caps in the growth sphere to smaller caps in value. Real rates are negative and seem to be staying that way, which is why gold is stagnant at the moment. What we are seeing now is the output gap closing (at a slower rate, due to lockdowns) and excess liquidity flatlining. Money is coming out of money market and into the stock market – and even into bonds. The sentiment reflected in these flows in the market doesn’t indicate a bubble, in Jurrien’s opinion. He thinks the market is betting on a lift from an inflationary boom when the economy reopens, with spending power in the market feeding into an inflationary environment. Follow along with Jurrien’s charts @TimmerFidelity on Twitter.

Recorded January 25, 2021.