BCA Weekly Commentary 7/30/21: GDP Disappoints
SUMMARY. This week we got definitive confirmation via a significant miss to 2Q21 GDP that the effects of inflation are eroding growth. Whether it continues may depend on passage of the infrastructure bill which may boost growth for several quarters but may also stoke more inflation. This vicious cycle has played out in 3rd world economies usually leading to little or no growth coupled with high inflation. Time will tell.
IMPACT. Model portfolios remain overweight small growth capitalization stocks which recently recently corrected significantly that we deem to posses superior risk/reward, compelling valuations, and are less dependent on economic growth. Further, we remain hedged somewhat with higher cash/ bond levels vs model targets. We recently added a lithium miner position to gain exposure to EV vehicle adoption which may accelerate wirh passage of the infrastructure bill.
Our model portfolio performance has been updated on our website as of 6/30/21.
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