BILS - The Other Side

• Who would have thought that we would be talking about the potential for an overheating economy at this juncture? Investors have been caught on the wrong foot, holding record levels of cash and bonds while being underweight inequities.
• We expect record operating margins, profits, and cash flow in 2021 and 2022, along with an accommodative Fed trying to cap rates, will lead to higher stock prices.
• But not all stocks will perform. There will be a continued rotation out of the pandemic beneficiaries, especially the defensive stocks, to companies with positive operating leverage benefitting from an economic recovery here and abroad.
• We expect many stimulus plans in 2021, which will only add fuel to an already recovering economy.

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