At Marketwatch Steve Goldstein calls our attention to a survey of investor sentiment done by Deutsche Bank. The three biggest risks identified by those surveyed were:
- Higher than expected inflation and bond yields
- SARS-CoV-2 variants that elude available vaccines
- Central bank error
The survey found 82% still expect inflation to rise after the COVID-19 pandemic, versus just 10% expecting deflation. A fifth, 21%, say U.S. inflation will average over 3% over the next 5 years, while 17% see inflation under the Fed target.
So, they don’t believe in central bank infallibility? Heresy!
Raises an eyebrow only 12% said “tech bubble”; the only option related to extreme valuations not just in tech; but equities; cryptocurrency; bonds, etc.
One historical lesson is valuations can stay extreme for a long time and get even more extreme. But historically; valuations do eventually matter….