We are entering the second half of this year with positive expectations driven by our belief that overall economic recovery will continue, supported by a further reopening of economies and increased normalization of economic activity.
The quick paced economic reopening has led to headwinds such as worker shortages, inflationary pressures, higher commodity prices, and supply chain disruptions that continue to be felt in many sectors. Industrial sectors such as autos, steel, and chemicals are experiencing depleted inventories which is supporting pricing power. While we expect most of these issues to be transitory, they will have varying degrees of impact on corporate earnings as we move through the remainder of the year. We think the impact could be a bit longer lasting for industrials, extending the duration of their recovery as they strive to meet rising demand.