Hard recession in USA and recession in Europe.
Even before the virus all businesses and households were ATH on debt, ATH P/E ratios, REPO market ATH, Liquidity problems -> Insolvency problems -> zombie companies, mortgage delinquency rising, garbage bonds, rising REAL unemployment rates, etc. Covid should be the final blow for main street.
USD REAL Inflation, money printing, followed by ECB & other central banks to do the same.
Interest rates =< 0 should mean that money printing is here to stay in 2021. The FED and ECB buying out the biggest companies though doesn’t do much to fix the economy.
Monetary policy seems to be a tool for the biggest to get bigger and the smaller companies to disappear. Remember FAANG and S&P companies are deep into lobbying, lots of party members are ex or current board members of these companies.
Pension funds could be at risk so potential money printing to cover for it.
Back to basics. Commodities Upcycle.
Many of the commodities are due for upcycle in price & demand. BRICS countries (about a quarter of the world) are considered emerging markets pointing for a stable demand growth for energy, infrastructure, housing, appliances etc and all of the required commodities for them.
Global inflation is a guaranteed tailwind for commodities as well.
There’s also a potential for a shift in investing mindset if other asset classes are kept low yielding & highly uncertain at current conditions.
Rise in criminal activities, Riots, War?
Not necessarily for 2021 but a world conflict is just around the corner. Net worth & income gaps are enormous in many if not all American & European countries.
Global recession, unemployment & health issues will stress test all societies.
Military spending might not be a hot topic in media but is still alive and strong.
Shift in the leading global economic & political power from US to China.
Back to travel is unknown, lockdowns will have investments impact.
Covid is a subject to a lot of controversies, but one is for certain, it will have a huge impact on your portfolio. Hedging is a must. There’s room for a volatility play. Airlines, cruises, shipping of goods, pharma are all on the table. Relief policies will also have impact.
Work from home & Remote work is the new office work.
In 2020 there was a huge epiphany from big companies. Before the lockdowns it was only theorized about remote work being effective but nobody was willing to risk it all to test the hypothesis. In 2020 though companies were forced to adapt, embracing the remote organization.
In 2021 we are yet to see shrinking companies costs in the tech sector, liquidating office space, cutting electricity, office maintenance, consumables & transport costs.
As a side effect allows for aggressive outsourcing, even further cutting costs.
Investment & Economic rules & correlations will be broken.
In 2020 unprecedented economic conditions has occurred in the investing world. Do not take for granted historic macro correlations between gold, bonds, stock, interest rates, housing, emerging markets, GDP growth, money supply, import/export, production & consumer indexes etc etc..
Keep an open mind on lockdowns, tariffs, militarization, cryptocurrencies, migrations of big populations, huge inflations and negative rates, technological disruptions, energy & water deficiencies and so on.
Biodegradable, Recyclable, Sustainable, Green.
The obvious trend will continue to benefit companies supporting the movement. Expect new regulations, sanctions & grants in 2021. If the economy is struggling though, I don’t expect anything too disruptive from governments around the world.
The movement however is not only top to bottom but social as well.. So possible slight change in consumer preference/caution that will be a tailwind for “green” companies.
DISCLAIMER — This is a very uneducated hobby channel. Half of what’s written is probably FALSE. Do your own due diligence.
