There is a big question mark hanging over the inflation data, he said. While the prices of goods and commodities are clearly rising, it is less clear whether or not it is “transitory” inflation due to low base effects and supply shocks – a claim central bankers have made while maintaining their restrained policies and activities Start of a more sustainable trend.
“In a world of just-in-time inventory, disrupted supply chains are a big problem,” he said. “It makes sense that this has led to some upheaval that has pushed prices up. But will they really return to normal in a few months? “
The most recent minutes of the Federal Open Market Committee’s meeting reflect an increasing openness to “taper talk” – which Taylor felt was prudent, although the FOMC may not yet be ahead of the curve and tighten the reins of inflation take .
There has also been a dramatic shift in the leadership of the factors in the months since last fall’s US election. Long-forgotten sectors like energy have come to the fore as banks have joined other cyclicals to regain popularity with investors, allowing the S&P / TSX to outperform the S&P 500 for the first time in years. Bond yields have also risen rapidly.
“Gone are the days when only large-cap technology stocks dominated and everything else sat on the sidelines,” said Taylor. “In a difficult environment. are these trends reversing? “