Macro Minutes: Why Growth in 2021

In this month’s edition of Macro Minutes, Capital Markets Innovation Research Analyst Dan Mathews discusses Fisher Investments’ views on global growth and value stocks for the year ahead.

Key Points

• The magnitude of last year’s drawdown was bear-like, but was quick, recovering within months, similar to a standard correction.
• When 10Y minus 3M US Treasury yield spreads are greater than 2%, value stocks frequently outperform. When spreads are below 2%, growth stocks tend to outperform. Currently, the Treasury spread is around 1.4%, which is too narrow for value outperformance historically.
• Market breadth has narrowed instead of resetting, a late cycle condition.