19 December 2020
Dear Fellow Investor,
Expect synchronized global recovery in 2021. As Covid vaccines get rolled out, consumers will venture out and spend. Local economies will loosen restrictions – Singapore on 28 December will increase allowed capacity in restaurants, malls, places of worship and tourist attractions. This will give an economic boost to many businesses and raise the spirits of those confined by lockdowns. The same is happening in Malaysia. Malaysian zoos, marine parks and museums are open today after being shut down for the last few months .
Supporting businesses are low interest rates which based on most Central Bank policies should remain low in the next few months. After the 2008 global financial crises the Fed cut rates to zero and kept them there for 7 years. As they did in 2008, low interest rates will boost stocks as money moves from bank deposits to quality stocks as well as precious metals and commodities which benefit as a hedge against currency debasement.
Weekly CRB Index traded in New York which is a basket of the world’s leading commodities .
Notice the 30 % rise from the March 2020 lows of a broad section of commodities including crude oil, soybeans, base and precious metals. This is evidence of economic recovery.
As in 2020 expect technology, healthcare, energy and the financial sectors to outperform. A gradual return to pre pandemic conditions will support these sectors. Fiscal stimulus, currency debasement and zero real interest rates will boost investment in equities.
Take care
Bill
I wish all my Christian friends and clients a Merry Christmas and happy holiday. You may copy this link for an animated holiday card.
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