The Reflationary Handbook: Short Tech, Long Energy
Teddy Vallee, founder and CIO of Pervalle Global, returns to Real Vision to share his latest views on economic growth, interest rates, commodities, and tech stocks. Citing everything from soaring retail sales figures to elevated levels of personal savings, Vallee projects that economic growth for U.S. GDP could be as high as 12%. In this reflationary environment, Vallee expects that bonds will continue to sell-off and that energy stocks will thrive while technology stocks will fare poorly. Filmed on March 1, 2021.
Key learnings: Due to his lofty projections for economic growth (around 12%), Vallee estimates that U.S. nominal and real 10 year Treasury yields are likely to rise 100-150 basis points over the following 12-14 months. Accordingly, he expects tech multiples compression 20-30%, and energy equities, particularly those in Latin America, performing well. Because energy comprises a small percentage of the S&P 500 relative to tech, this period of reflationary growth could actually result in negative returns for the broad index.