Another 1.9 trillion in Covid stimulus is likely heading to the President’s desk this week, US consumers have the highest personal savings rates in a century, and the vaccine rollout is putting a third quarter return to relative normal as a high probability scenario.  With this backdrop, we expect inflation to pick up meaningfully this year, and for rates on the long end of the curve to inch higher.  Under these conditions, commodities and financials should deliver relative outperformance.

With this in mind, we removed Consumer Staples, reduced Utilites, initiated a position in Financials, initiated a position in Energy and initiated a position in a broad basket of commodities.