Reflation Trades Will Work Again: CPLIX Commentary
June 12, 2017
The latest commentary from Michael Grant, Senior Co-Portfolio Manager of the Calamos Phineus Long/Short Fund (CPLIX), addresses two scenarios:
- The resumption of reflation trades, an extension of the bull market for the rest of the year and the Standard & Poor’s 500 peaking 5%-10% above current levels.
- The bull market peaking within one to two quarters if reflation doesn’t perform in the second half of the year.
The fund continues to be positioned for the first outcome as Grant expects a sustained reflation cycle into next year, which would benefit financials, select cyclicals and growth technology stocks.
“The Fed funds rate and yield curve do not point to recession until late 2018 at the earliest: stocks still have runway, led by acceleration in year over year growth in sales and earnings into late 2017,” Grant writes in a May 31 Performance Review & Portfolio Positioning Commentary.
Regionally, here’s how CPLIX, a global long/short equity fund, is positioned:
- United States: “Sentiment of both consumers and corporates is positive and suggest the economic cycle is working.”
- Europe: Grant remains bullish on European companies’ sustained cyclical improvement. Even so, he says, markets are likely to pause in the short term.
- Emerging markets: The fund sees “selective opportunities at appropriate valuations.” China’s failure to delever, however, is a risk to Grant’s positive global outlook.
Advisors, there is more detail including 5/31/17 fund performance, sector weights and net exposure in the For Investment Professional Use Only-commentary. For your copy, please talk to your Calamos Investment Consultant at 888-571-2567 or firstname.lastname@example.org.
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