Download Andrea Cicione's "Covid vaccine: Less EPS downside; Growth-value rotation back on"
Growth-Value Rotation. The latest attempt was predicated on expectations of a “blue wave” in the US election, which failed to materialize. But a vaccine may succeed where hopes of a large fiscal stimulus did not, namely, by delivering a sustained and faster-than-previously-thought recovery in growth, employment and inflation. All this points to higher yields. Growth-Value rotation would make the equity rally more sustainable. While the Growth-Value rotation should redefine leadership among sectors, it could at the same time help unlock some more upside for the whole market. We have long argued that Tech needed a bubble to continue performing as it has done in 2020. Since Value sectors are trading at significantly lower multiples than IT, they appear to have much more headroom for further gains.