From the 1980s a 'Modern Cycle' evolved driven by lower inflation, independent central banks, globalization, lower volatility, longer cycles and higher profit shares of GDP. GS Research analysts argue that we are entering a new 'Postmodern' cycle in which inflation is a bigger risk than deflation. They also predict that we are likely to see greater regionalization, more expensive labor and commodities, as well as larger and more active governments. According to our analysts, investment returns should be weaker in this cycle as higher interest rates imply smaller contributions for valuation. They expect a more ‘Fat & Flat’ than a secular bull market with more focus on alpha than beta.