A time to heal and time to invest!
So finally its done! The rollercoaster of a ride, that was the 2020 US elections has finally come to its end! President-elect, Joe Biden and VP Kamala Harris, will be in White House on January 20, 2021.
That along with the announcement of successful trials of a Covid Vaccine by Pfizer has given the market a lot to cheer. The economies around the world had suffered, primarily because of Covid 19 pandemic and doubled up with various own goals such as Brexit, trade wars and territorial disputes.
But as Joe Biden said in his acceptance speech, “Its time to heal”. Not only for the American polity but for the rest of the world, literally. The potential of the Covid vaccine by Pfizer and similar ones from others such as Moderna, are a Shot in the arm of countries who have suffered through this pandemic. The possibility of more constructive American policies on Trade, climate change and geo-politics, should somehow soothe some of the frayed nerves around the world. This should help in rebooting the relationships across the world on various issues. All this can only be good for markets.
We believe that Value investments, which had taken a toll, during the last year, will be back. Industries and companies in Hospitality, Tourism, Automobiles, Banks, Travel and other Cyclical industrials will start doing lot better with greater visibility of earnings and consumer demand. They would also generate a lot of jobs, which were lost during this time.
Opportunities abound in the equity markets as well as energy sector. We believe the Dollar will maintain its current weakness due to the extraordinary expansion of the Fed balance sheet, but it will also buoy the global markets.
Its time to go long Oil, Gas, Automobiles, Pharmaceuticals, Travel and Retail shares. We believe the technology sector will be flat as valuations are stretched. Whilst the world will try to move back to its old habits, certain technologies are here to stay. The consolidation witnessed in energy sector during the last few months, could move to technology sector too as some of the weaker players get bought out. The EM fixed income markets will provide plenty of opportunities again and it is time to go hunting for good names.