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The Short View - Don’t write off value stocks just yet

In a week in which technology shares reached record highs, and the valuations of Amazon and Facebook eclipsed $500bn, investors should revisit a 2016 trade that many thought had all but died out.

Lost in the tech rally is the surprising turn from other cyclical sectors and the glimmers of hope they offered for the broader economy. It included upbeat commentary from bulldozer manufacturer Caterpillar and faster profit growth at aerospace group Boeing.

Investors have long since written the obituary on the so-called reflation trade that gained momentum after the election of Donald Trump. Economic growth was supposed to quicken and inflation rise as the new administration pumped billions into infrastructure, cut taxes and defanged regulations. The eulogies may be premature.

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