Much has been made about the strong stock market rally since last November. A primary force driving higher stock prices has been what is known as the “reflation trade”, which is a bet by investors that expansionary monetary and fiscal policies will bring stronger economic growth and rising inflation. In fact, this reflation trade got its start more than a year ago dating back to the February 2016 lows. But following what has been a strong run since, the reflation trade is now slowly dying. And if this trend continues, it has important implications for stock investor positioning in the months ahead.
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