April 8, 2021
Portfolio Manager at Winthrop Capital Management, Adam Coons, discusses expectations for the economic recovery and compares 1Q performance for value and growth stocks.
Elena: Joining me now to take a look at how markets are moving is Adam Coons, Portfolio Manager at Winthrop Capital. Adam, thanks for joining us. I’d like to start by asking you about today’s jobless claims numbers. Are we right to say this is just a blip?
Adam: Yeah, I mean nothing in this economic recovery is going to happen in a straight line. We should expect to see some blips – bumpiness, really – with how we recover. You have to think about the fact that we lost over 25 million jobs in the peak, pre-pandemic. We are recovering that, but we still have 7 to 8 million more to go just to recover to pre-pandemic levels, and that’s going to take some time.
Elena: The Fed of course is looking out for full employment, and after yesterday’s minutes, should markets assume monetary policy taps won’t be turned off, or would that be foolish?
Adam: Let’s be real, here. It’s going to be really difficult for the Fed to end QE anytime soon, if ever, really. Quantitative easing has become the new normal, and capital markets expect it. Anytime they turn that tap off, we see dislocations in the market that the Fed has to come right back in and begin it again. So, yeah I think this is here to stay for a while.
Elena: In that “new normal,” where should investors turn when they’re evaluating Growth against Value?
Adam: Value has outperformed significantly throughout the first quarter of this year, and that is largely attributed to the fact that rates are rising along with the expectations of growth. But if we continue to see rates stall out and maybe even go down, you’re going to see that rotation flip back towards growth-oriented technology stocks, and we think that over the course of this year, that is going to happen again.
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