With the opening of the new year, monetary and fiscal policy in the Western world remains loose due to high unemployment and the fragility of the financial system.
Incoming US President Joe Biden will inaugurate an excellent team around him on January 20, despite the continued efforts of outgoing President Donald Trump and his supporters to change the election results.
In Europe, the Brexit saga came to an end with a compromise agreement, as expected. Of course Britain will remain a satellite of the European Union, despite reflections on a resurrected sovereignty and empire.
China and much of Asia (though not India) are emerging from the crisis in an enviable way, while the Western world remains bruised, both in absolute and relative terms.
The plague continues to take a heavy toll
The corona epidemic will continue to take a significant toll before the vaccination process is completed and proven effective. Credit Suisse is worried about the next three months, and thinks that a return to normalcy will only be possible towards the end of the third quarter of next year.
Credit Suisse chief investment officer Michael Strawbeck said: “Unfortunately, many countries like the United States and Switzerland are still battling the epidemic at disproportionately high human, social and economic costs, which I think will take years to overcome and recover from. I hope the West learns its lesson. More ready next time. ”
Good news in market prices
According to Credit Suisse chief investment officer Michael Strawbeck: “In 2021 markets will have a slightly volatile relationship with optimistic forecasts. However, it is very unlikely that we will see a recurrence of cataclysmic market events as they occurred in February 2020 unless the virus becomes lethal or overpowers vaccines. For two or three years of relatively calm markets, until things recover and we return to normal. “
At this point everyone is starting to ask themselves, “What should we do to prevent similar trauma in the future,” according to Michael Strobeck: Less populism, more government intervention in daily life, more restrictions on movement, and hopefully also better and more prepared health systems.As a result, we are likely to continue to experience price inflation in real estate, especially in stocks and real estate, in the next two to five years.
The challenges deepened
It is very clear that the epidemic has deepened many challenges that already existed in the Western world long before the crisis occurred: growing inequality in terms of wealth, income, opportunities and access to health services; In addition, there is a growing takeover of technology and capital in the digital-global economy.
Geopolitically, the world continues to move from a Western-dominated world agenda to a world of polarity. China’s continued rise and Asia’s successful treatment of the plague illustrate this change.
The most immediate effect of the plague and the one that will last longer than anything else, is the effect on mobility: the feeling that we can go anywhere and do whatever we want at any time is lost, and maybe that’s not such a bad thing. It will definitely be quite some time before we feel comfortable again entering a basketball stadium or a packed concert hall.
What has indeed promoted the corona crisis is the digital use of reciprocal links through online media, and thus, by default, the process of social distancing as well. As a result of the epidemic, globalization and socialization have moved online.
Central banks anticipate a fitting year for the markets
According to Credit Suisse’s chief investment officer, “Once we get through the next three months, 2021 will be a fair year for markets if banks do not change their minds about their restrained fiscal policy – it still remains the key to markets, and only inflation can change that.”
“I continue to think that the epidemic was a shock that increased the deflationary trends already prevalent in the global economy today, such as surplus savings, demographics and technology, which are lowering commodity prices. Are now in a state of ‘monetization stealth’ and will remain there for years to come. With low rates around the world, there is no more money to be made in excess free capital, and our savings will have no value unless we invest them in risky assets. Only smart and creative investors “.
Next year, central bank policy will continue to play a key role in determining stock market moves, which experts at Credit Suisse believe will increase by the end of 2021. However, experts’ recommendation to investors is not to expect a further 44% increase in NASDAQ or a further 16% 500 S&P. Instead, they should stop thinking about procrastination – and dare