by winston » Mon Feb 08, 2021 9:07 pm
Five Risks for 2021
1. Risk one: New president in the US White House. A new president inevitably brings uncertainty to the market. In terms of what that means for investors, there is a risk that there could be a rotation across investment sectors in the coming months and we expect Democrats to use the budget reconciliation process to allocate more spending to climate change, infrastructure, healthcare, state government aid and education.
2. Risk two: The vaccine rollout could stumble. There is a high level of uncertainty still surrounding the vaccine roll out. There are many logistical challenges to mass vaccination, including manufacturing sufficient quantities in the next six months. Cyclical trading strategies are predicated on more normal life by the summer of 2021. Any sign that this timeline is too ambitious could cause volatility.
3. Risk three: Fiscal support could be further delayed. The time for fiscal spending is now, before there is permanent scarring in the labour market, particularly as individual states are starting to restrict activity in an effort to slow the spread of Covid-19. Biden will have political capital to unify his party in areas such as fiscal spending and taxes.
4. Risk four: Globalisation could retreat. Conflict with China could morph from one of trade deficit and tariffs to one that is more existential and security related. Europe and Asia could be forced to line up with either the US or Chinese spheres of influence. Additionally, any movement toward supply chain nationalism could shave corporate profit opportunities.
5. Risk five: Markets could go back to square one. We could witness a repeat of 2019’s sell-off in the new year as price action became extreme going into year-end. Bad Covid-19 data could slow the recovery, prompting a headlong rush into tech and growth names once more if markets exhibit a risk-off tone.
Source: The Edge
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
