Asset Allocation for 2021 and beyond: A Summary

Diminished recession risks, continued central bank support, Tempering of trade tensions, global economy to climb back to pre-crisis trend.

  • Risk assets will outperform but note elevated valuations

  • Allocation skew to EM, Japan and Europe ex UK

  • Maintain low cash position with overweight in High Yield and neutral on IG holding curve steepening positions

Before I get started, I love diverging charts. I can only assume that prior to 2008, the two measurements continued to track each other. I'll have to dig more into Yardeni's methodology. http://www.yardeni.com/pub/stmktfsmi.pdf