Scott Mordrick

The volatility we witnessed in equity markets early in Q2, which peaked on 9 April, has largely dissipated and returned to more ‘normal’ levels. The bulk of the early ‘easy’ gains from the April lows are now priced back into the market, though by our reckoning there is still some room for further related gains - even in those areas of the market that might reasonably be characterised as overvalued.

We are cautiously constructive on equities, speculating that elevated nominal economic growth - fueled by large government deficit spending - will, on the one hand, encourage equity indexes higher, while on the other hand, noting that significant risks remain in both the short and long term.

Meanwhile, in fixed income, we are content to hold a neutral-duration, broadly diversified position (including government bonds, investment-grade, and sub-investment-grade corporate bonds) and simply collect the coupon income.

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