Although we appreciate and understand it is very easy to focus on the immediate health and economic challenges posed by the resurgence in infections, we don’t believe these are a match for the prospect of a post-vaccine world in 2021 thanks to the recent success of the vaccines from Pfizer, Moderna and AstraZeneca. These successes point not only to a return to normalcy during 2021, but also a rapid economic recovery – and as a consequence it is important to maintain a long-term perspective and look forward to upside potential for global equity markets, as we don’t believe this return to normalcy has yet to be fully reflected in equity prices.
Additionally, the difference today compared with the March lockdowns is that the US economy (the largest economy in the world) is continuing to recover from the outbreak. For example, this week we saw US industrial production data increase again during October, while capacity utilisation rose to 72.8% – which is well above the low of 64.2% in April. Furthermore, global trade is likely to improve under a Joe Biden Presidency.
Looking ahead to this coming week, despite being a shortened week due to Thanksgiving in the US, we have lots of important economic data releases, including US consumer confidence, the Chicago Fed activity index, US durable goods orders and the US weekly jobless claims data (which will be released on Wednesday rather than Thursday due to Thanksgiving).
Additionally we have US, UK and Eurozone PMI data, along with Japanese industrial production and Japanese retail sales.
Investment Management Team