It wouldn't surprise me, candidly, to see the market hit a new high sometime in the next 12 months. Corporate profits, as measured from the GDP accounts, are actually past the prior peak. I would say the quality of the earnings is much better than it was when we were at the previous peak because a third of those earnings just came from one sector, which was financials. I think the Fed, personally, is going to remain a lot easier, longer than people are expecting. I think the whole idea that central banks, particularly the Fed, has made the decision that it won't tolerate deflation makes the asset allocation decisions a lot easier.
Now that you kind of know that inflation, or sticking the landing, are the two most likely outcomes, the equity allocation decision is just beginning. In my view, that is the greatest single catalyst. Hedge funds have already moved a lot of assets towards equities but long-only funds, retail investors, pensions and endowments are just starting to move the turrets toward equities and equity investments. That tends to happen over a very long period of time, it doesn't happen over a two or three month period, which is all we've seen in terms of flows into equity funds.
~Jason Trennert, managing partner, Strategas Research, Consuelo Mack Wealthtrack, April 22, 2011