Everyone Is Crowding Into Reflation Trades Priced for Perfection
- EM, small-caps set up to disappoint after blistering quarter
- High hopes around 2021 veer into over-optimism: Panigirtzoglou
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With reflation trades notching some of their biggest gains in decades, even stock bulls can be forgiven for fearing that global markets are priced for perfection and risk sinking next year.
Small-cap stocks in the Russell 2000 that do well as growth rebounds have earned almost 30% so far this quarter. Emerging-market carry trades are on course for their biggest quarterly gain since 2012. A gauge of global value stocks that tend to ride the economic cycle has just had its best month since 1975.