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Marked by the most severe recession in modern history, 2020 was an unprecedented year. With the global pandemic continuing, we enter 2021 with a mildly positive outlook for the upcoming recovery, but with the assumption that the path to pre-crisis growth levels will be long and uncertain. Against this backdrop, investors should be ready to play rotations in their portfolios, favouring cyclical themes but also keeping a strong focus on quality.
Developments on the virus and vaccine front and the US election are hot topics. Markets are pricing in a glass-half-full scenario, despite the still-alarming infection numbers on the virus front (second wave in Europe and record new cases globally). The interconnection of the three cycles — virus, real economy and financial — continues, but the virus transmission mechanism is changing.
The US Presidential election takes place in 25 days and holds enormous implications for global financial markets. Last Friday, Trump announced that he has contracted the coronavirus, and his handling of his own illness has become a major development in the dynamics of the race. In addition, last week the two candidates held their first presidential debate, which was another important event in the course of the campaign. Learm more about the possible scenarios and market impacts with Lisa Jones, CEO of Amundi’s business in the Americas, Ken Taubes,US CIO and Head of the US Investment Platform and Didier Borowski, Head of Global Views in this first episode dedicated to the US elections.
Markets are pricing a lasting deflationary and low discount rate environment, and the ability of monetary and fiscal policies to continue to feed the “financial multiplier,” hence keeping a positive momentum of policy support. This support generates a certain dispersion of returns that offers opportunities for relative value play. This is the game investors should play as long as the policy mix keeps markets in a relative calm. Listen to Monica Defend, Global Head of Research, to discover the asset allocation views of October, in this new episode of Blue Convictions.
The summer season has seen both the confirmation of existing themes and the emergence of new ones wich will likely drive economic and market trends in the coming months. On one hand, the decoupling between the real economy and financial markets has proved persistent but on the other hand as the holiday season going on the way the rising level of Covid-19 infections across Europe and in part of the US confirm that the pandemic is still not yet over. Monica Defend, Global Head of Research discuss the overall economic recovery and share Amundi main areas of convictions.
The Covid-19 crisis drove the global economy into an unprecedented deep freeze in the first half of 2020. The combination of monetary and fiscal stimulus will help the global economy de-freeze in H2. As was the case with the virus cycle, the recovery will be sequential and involve different regions at different times - on a ‘first in, first out’ basis - and will depend on the size of the policy response. As the global economy gradually de-freezes, investors will turn their focus back to geopolitics.
Remaining active, selecting the assets and preserving liquidity are the key points of this new Blue Convictions episode on Amundi’s global investment views. Central Banks are still game changers, but the risk of default for fixed income and the need of earnings growth check for equities have to be considered in the medium term. On the currency market, what about the recent appetite for the euro versus the dollar? Listen to Monica Defend, Global Head of Research, who explains our views and convictions: a bumpy road to a “day after” renaissance.
A lot is coming from the fiscal side in Europe to fight the economic consequences of the crisis: French supplementary budget just released, Germany abandoning the black zero policy, and the debate on recovery plan taking center stage, with some adjustments in countries’ positions. How to assess these recent evolutions?