Defining reflation, gauging momentum
We believe that global reflation is predominantly a growth (rather than inflation) acceleration story. Emerging markets are broadly participating, and importantly the EM earnings cycle has finally turned positive. Risks to this view remain— China growth peaking, a possible "last phase" of USD strength, or a capping of positive earnings estimate revisions (given higher implied growth in current projections). Still, we are optimistic that the turn in momentum can drive additional performance for the asset class, particularly given that valuations are not yet at levels that challenge this improved momentum backdrop.