In today’s briefing we highlight a mix of themes covered by analysts in a week when there was renewed optimism of a vaccine breakthrough that will (with further evidence) give a major boost to the global economy and asset prices. When assessing how equity markets have performed since the end of March, Cornerstone Macro shows how a clear picture has emerged, “high-quality growth” has prospered, and ”higher-beta and lower quality cyclicals” have been left behind. But that could be about to change, say Ollari Consulting. A vaccine is clearly a game changer, so, with ample liquidity on the table (not a given, see this piece), there could be a strong possibility that we see a significant market rotation in the coming months where pro-cyclical sectors, small caps, value, high beta outperform. Throw in a weaker US dollar as economic confidence returns, and you add further fuel the reflationary narrative. This begs the question about inflation, it’s a hotly debated and searched topic (hat tip Top Down Charts), and Longview Economics make the case that in this cycle, the deflationists have it wrong (i.e. Inflation didn’t return after the GFC, so why would it now?). Longview argue that two key ingredients (less prevalent then) for high and rising inflation over the medium term – large levels of money stock and rising money velocity – are now in place. In other research, SouthBay Research, one of the market’s top forecasters on US employment data, points out that official jobless claims data are overstating the number of unemployment claims. The jobs market has been in recovery for 2-weeks now. And lastly, while DM economies start looking more promising, the picture in EM is worsening, with emerging market specialists Tellimer highlighting how precarious the finances are in emerging and frontier economies. Just in the last month, the number of countries seeking help from the IMF has surged by almost 60%.