Risk assets staged an impressive recovery after a week where the VIX saw thebiggest daily spike since the ‘Volmageddon’ in early 2018, and the second highestsince the financial crisis. We used this temporary risk-off episode to scale upexposure to risk assets again – see Welcome to the YOLO world, 2 Feb 2021.Our view on fundamentals and the global macro environment hasn’t changeddramatically – things are really quite all right, particularly versus expectations.Beneath the surface, however, we find pockets of substantial weakness, with thelikes of low-income employment and small businesses being left behind in the US.Contrary to what one might expect, we’ve argued that this ‘K-shaped recovery’introduces significant upside risk for risk assets in 2021: rising inequality will preventfiscal and monetary authorities – particularly in the US – from dialling back stimulus,while aggregate economic data are in quite good shape.