FXStreet reports that according to David Lebovitz, Global Market Strategist at JP Morgan, value stocks tend to do best against a backdrop of accelerating inflation.
“Inflation can be a symptom of an economy that is operating above its potential; therefore, it makes sense that value stocks tend to outperform their growth counterparts when inflation expectations are rising, as higher inflation should in theory coincide with stronger earnings growth. The remainder of 2021 should see an acceleration in economic activity, rising inflation, and higher interest rates. In general, this dynamic should support the outperformance of value relative to growth, with attractive relative valuations acting as an additional tailwind for value outperformance.”
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