Asset Allocation: No Landing?

By Tony Brennan, Chief Investment Strategist

With a slowing in progress on inflation over the latter half of last year, and growth continuing to run above trend, fears still of a hard landing around mid-year have given way to concerns about there being no landing at all in the US, with the economy continuing to grow strongly and inflation staying too high. These are compounded by potential risks from the incoming US Administration’s policies, which could increase growth and/or inflation and, while nationalistic and having the US’ interests at heart, may not be ideally timed, and could end up putting further upward pressure on interest rates and creating headwinds for the stock market. Even if restraint prevails and such consequences are limited, the high valuation of US stocks after two years of robust returns could still make for more subdued forward progress.

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