Nevertheless, the divergence is interesting as it suggests that there is less crowd conviction about the growth element of the reflationary story than is being touted by the talking heads.
In a reflationary environment we would expect rising rates, more competition for capital, and greater differentiation in the performance between firms -- all important ingredients in generating alpha.
These, coupled with resistance to price hike, will keep prices down as the economy picks up gradually from reflationary economic policies and stable oil and electricity outputs.
