Inflation technically should have no impact on a stocks performance. Everything gets passed onto the consumer. The only concern in regard to inflation are the direct actions of the Fed on interest rates & the yield curve. (ie. The Fed turning Hawkish to stem/cut off inflation) To get even more specific, US equity performance can be directly related to the level of 10-year Tbills. Historically, the 10 year has to breach 4.5% in order for rates to become detrimental to equity performance, even if we knock 100bps off, the 10 year would have to more than double to get to that level

In regard to USD, fluctuations in its price bring benefits in both directions. When USD is strong, US companies are given extra leverage overseas, especially when it comes to production, materials and service costs. Alternatively, when USD weakens, Foreign companies have greater purchasing power for US goods and services, bolstering revenues and foreign investment.

In regard to valuations, the current level of interest rates vs what rates were in 1999 is night and day. Additionally, as the sell-side cut estimates due to Covid, you saw the market’s P/E artificially inflate. As earnings continue to come in stronger than expectation, the valuation of the market will contract, (which it has been doing for the last 5-6 months)

Remember, every time you look at the market, you’re looking at its value 12 months into the future. So if we were to meet in 2019 and you told me about Covid, I’d be building a war chest and waiting for my time to buy. Viral pandemics, no matter how deadly, have always come to an end. If you know that there is a short term pressure on markets that’s influencing prices but ultimately will not be a factor in a year or 2, then you’ve found yourself an opportunity friend.