QUARTERLY INVESTMENT OUTLOOK: APRIL 2021

• The U.S. dollar is in a bear market. This should lead to higher commodity prices and ultimately benefit Global ex-U.S. equities. We expect global to outperform U.S. equities in 2021. The rapid rise in U.S. bond yields could temper the advance in equities, thereby dampening the rise in yields.

• The U.S. growth outlook favors a continuing cyclical recovery as shown by the trend in both the Conference Board’s Leading and Coincident Economic Indicators. We follow a ratio of the LEI to the CEI which leads both recessions and recovery phases of the business cycle.

• China’s credit impulse at +9.06% suggests that the uptrend in industrial metal prices should continue.

• A monetary regime change is a necessary condition for higher inflation. This happened in the early 1920s and 1970s. In our opinion the U.S. Government’s willingness to run twin deficits, which are likely to be funded by the Fed (buying $80 billion of treasuries every month) is a regime change. Higher inflation/bond yields are inevitable.

• Gold prices have been consolidating since August 2020. Gold miners have corrected by 25% and trade at historically low levels relative to the bullion price. We anticipate significantly higher gold prices and are bullish on the miners.

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