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Equity factors for a reflationary environment

NWStock / Shutterstock
NWStock / Shutterstock

It's time to dig deeper for opportunities as equities become more expensive. In an environment of U.S.-led reflation-accelerating inflation and nominal growth driven by an awakening of animal spirits and expectations of fiscal stimulus-we see potential for outperformance in equity style factors such as value (the cheapest corner of the market) and size (small and mid caps). Returns on equity factors have been volatile since the financial crisis, with value and size rebounding in 2016 after weakness in the previous year. Both of these factors are influenced by cyclical drivers. See the chart below.

The case for value equities

net interest margins

Small caps poised to extend gains

interest expense corporate tax cuts

Bottom line

Global Equity Outlook Kate Moore is BlackRock's chief equity strategist, and a member of the BlackRock Investment Institute. She is a regular contributor to The Blog .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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