This month, Jason Weaver discusses sector outlooks, the Federal Reserve dot plot, and the return to normal.
Sector Outlooks
Industrials, Materials & Consumer Discretionary: Benefactors of new stimulus to businesses, Vaccine deployments (Reopening) & Weakening dollar
Financials: Benefactors of rising rates, consumer confidence, & reopening
Energy: Benefactors of rising commodity prices, weak dollar, & reopening (more travel)
Technology: Benefactors of stimulus, trends technology adoption (cloud) & increased WFH, Negatively impacted by rising interest rates
Communications: Bifurcated sector between legacy (telecom) & newer media (GOOGL & FB)., Subsector is important
Health Care & Staples: Negatively impacted as investors will look to shift from “safety” to more risk exposure
Utilities & Real Estate: Negatively impacted by rising interest rates & investors shifting to more risk exposure
Federal Reserve Dot Plot
The dot plot is a chart that records each Fed official’s forecast for ST interest rates (currently between 0-0.25%).
Each dot represents one Fed official.
It is kept anonymous.
The purpose is to give investors an advance look at what officials are thinking about future rates.
Return to Normal
The “Return to Normal” Index measures human activity data relative to pre-pandemic levels.
It tracks travel, returning to work and school, brick-and-mortar shopping and eating out.
It is focused on measuring components of daily life rather than economic indicators like GDP growth
Upside: Faster vaccine distribution and uptake could accelerate the path to normal
Downside: emergence of variants that are resistant to current vaccines or slower uptake of the vaccine in certain places
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