Morgan Stanley | This liquidity tsunami will continue in 2021: we estimate another $2.8 Tr . This is more than double the liquidity that central banks injected in any previous year. However, this liquidity does not find its place in the financial markets immediately. In fact, $4.5 Tr are currently deposited in monetary funds in the US.
In the World
Fabrice Jacob (JK Capital Management-La Francaise) | As we are approaching the end of the year, it is time for us to stick our neck out and make some predictions for 2021, especially for our key investment universe that is China, which has been a star performer for the second year in a row (MSCI China gained 20.4% in 2019 and so far this year, as at 11th December 2020, another 23.3%).
Mobeen Tahir (Wisdom Tree) | The rollout of the vaccine worldwide and its impact, along with everything else that might happen next year, remain uncertain. Thus, what could move markets in 2021? We endorse the notion of a high-quality core equity exposure complemented by targeted growth opportunities – particularly in spaces like cloud computing, AI or clean energy. Sectors built on innovation will remain exciting as markets can never fully price in their growth potential – for innovation is, by definition, new and something that stimulates growth.
Keith Wade (Schroders) | Clearly, Japan’s debt is significantly higher than the US’. However, it is stable rather than rising. This reflects the poor position of US government finances before Covid-19, where the budget deficit was running at 6.3% of GDP at a time when the economy was doing well with unemployment at less than 4%, a 50-year low. (In net terms the comparison is less stark with Japan at 180% GDP versus 114% in the US).
On Sunday at 11:55 p.m., an agreement was reached in the U.S. Congress for the $900 billion fiscal stimulus bill that will relieve the impact of the Covid19. This program represents 4.2% of US GDP. Today, the House is expected to vote on the bill, followed by the Senate.
Peter Isackson | A year ago, Elon Musk was officially worth about $20 Bn. Two weeks ago, he became the world’s second-richest person, with a fortune estimated at $128 Bn. Thus, Musk deserved a lengthy video interview with the Wall Street Journal. It could probe into how Musk managed to become the world’s wealthiest and most admired innovator. The Journal couldn’t saddle any random hack with that formidable task, and so its editor-in-chief, Matt Murray, rose to the occasion. The interview lasted half an hour and can be viewed on YouTube.
Alphavalue | Our dividend estimate for 2022 is 30 billion euros higher than the figure expected for 2021 (+12%), but is still 60 billion euros lower than a year ago. Excluding the impact of the health crisis, we think that the dividends for 2022 could have reached 360 billion euros. A remarkable difference.
The last policy meeting by Banxico in 2020 is set to capture broad attention, as several topics alongside the monetary policy agenda will be on the table. In addition to a debated interest rate cut, Banxico will be faced with concerns over the recently approved Senate bill on excess dollars, dollar auctions from Fed swap lines, and the departure of one of the board directors.
Pablo Pardo (Washington) | The catastrophe following the elections, with president Donald Trump refusing to admit electoral defeat and practically the entire Republican Party supporting him, has confirmed the US is almost a developing country but without malaria. With the US in a political situation of underdevelopment, the management of the economy until Trump leaves the White House, passes to the Federal Reserve. In principle, this is on the outside of political disputes.
Peter Isackson | The entire Western economy has consistently relied on theft to establish inalienable rights of ownership over what are essentially vaporous ideas.Those who understand the true history of Apple’s emergence as the paragon of creative innovation appreciate the fact that what Jobs did was so not much theft as the appropriation of existing ideas. Dmitry Dragilev explained how it all happened while offering his redefinition of the process of innovation itself: “take something that has been discovered and improve it.”