In the short term, we are concerned that confidence in the growth outlook will wane, particularly given the recently weaker data in China, ‘stagflation risk’, and an earnings season dominated by the ‘margins squeeze’ story. Visibility on the outlook has deteriorated and selected risks have increased. We believe, however, in the supportive base case that continues to favour equities over government bonds. Growth should strengthen as Delta infections and inflationary pressures wane, while central bank support should recede only slowly.
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