Market & Topical Perspectives

1Q21 Market Overview: Mirror, Mirror

1Q21 Market Overview: Mirror, Mirror

Market Overview Mirror

The reflation trade that emerged in late 2020 persisted through the first quarter of 2021. A relatively steady vaccine rollout in the US combined with a steadfastly accommodative Federal Reserve and ongoing fiscal support had investors hopeful of strong economic growth in 2021, to the benefit of economically sensitive stocks.

Key Takeaways

  • Key-Takeaway

    The reflation trade that emerged in late 2020 persisted through the first quarter of 2021. A relatively steady vaccine rollout in the US combined with a steadfastly accommodative Federal Reserve and ongoing fiscal support had investors hopeful of strong economic growth in 2021, to the benefit of economically sensitive stocks.

  • Key-Takeaway

    While we welcome the recent broadening of the market recovery, there are a variety of factors—the potential emergence of meaningful inflation not the least of them— to suggest potential frailty in the near- and longer-term performance of equity markets.

  • Key-Takeaway

     In a forward market environment that could offer more modest returns, it may be prudent to assume actively generating alpha will be more important than merely capturing beta. At First Eagle, we specifically target sources of alpha that we believe have the potential unfold over longer time horizons.