He said, “It seems that everything is connected with an asterisk. You can’t look at economic data without questioning how economic stimulus controls and employment subsidies have affected it. When you look at the rising prices of goods and raw materials, the idea that this is “temporary” seems always cited as a reason to ignore it. Everyone is looking for pure data that simply doesn’t exist. “
The Fed has now started talking about tapering and envisioning the world beyond government and central bank stimulus measures is now the main task for the second half of the year. With many programs retiring after Labor Day, third-quarter earnings comparisons being more difficult for companies to achieve, and the market being valued for perfection, Taylor believes this could create a tougher investment environment.
He said, “Gone are the days when only large-cap technology stocks dominated and everything else sat on the sidelines. The reopening of trading has resulted in a rapid spike in bond yields, allowing long-forgotten sectors like energy to take the lead. Cyclicals, including banks, are back in favor, allowing the S&P and TSX to outperform the American S&P 500 for the first time in many years.
“In a difficult environment. are these trends reversing? Is the new defensive tech sector taking the lead? All of these questions need to be clarified. “
He added that recent trends could lead to a return to active management. For most of the past decade, investors have been content to just buy the benchmark and live their lives, but as the world grapples with returning to normal, more bumps are expected.