[ad_1]
– It will be a “tug of war,” a true tug of war, says senior portfolio manager Olav Chen at Storebrand.
In recent weeks, stock markets have received a solid boost thanks to the good news about vaccines. But in recent days, reality has sunk in that it will still be at least six months in the West, perhaps longer, before a sufficiently large proportion of the population has been vaccinated and the economy fully resumes.
The bottom line is that the last week has been weak in the stock markets, at least compared to the euphoria of the previous weeks.
– The news of the vaccines is almost discounted. But the stock markets always look to the future, and while you see a ray of light in the tunnel, there is optimism. Now that vaccination is underway in the UK and will begin in a few days in the US, we see the end of the pandemic. But the next few months will definitely be challenging, says Chen.
Grim infection rates
He rightly emphasizes that vaccine news has so far outpaced the contagion boom we’re seeing, especially in the United States. But only in May are most people in the US expected to get vaccinated, according to a report by the big bank Goldman Sachs, and now the infection figures are grim.
Vaccination begins while the pandemic is in one of its darkest phases yet. The world has recorded 1.6 million deaths and 72 million infections since the corona outbreak began nearly a year ago.
Infection is increasing dramatically in the US, which is already the worst affected country in the world in terms of number of deaths and proven cases of infection.
In the last week alone, 1.1 million people tested positive for corona in the United States. In recent weeks, there have been more than 2,000 deaths a day and hospital capacity has exploded in various places. In total, more than 16 million tested positive.
– The rate of vaccine implementation will be crucial for future growth prospects. Eurozone fourth quarter GDP growth is expected to come to an abrupt halt again due to new closings, but remains above trend in the US, because they have not closed to the same extent there. But the first trimester will also be difficult. Therefore, it is urgent to launch a new rescue package in the US, says Olav Chen.
Waiting for a new crisis package
In the short term, it’s a month-long confusion in Congress in Washington about a new crown crisis package being applied to the markets. Reports there have oscillated between hope and despair and no agreement has yet been reached.
In practice, this means that millions of broke and unemployed Americans do not receive the long-awaited check from the state that they have been waiting for. In addition to personal tragedies with eviction threats and a Christmas without gifts and good food, this also sends shockwaves to the rest of the economy, which is completely dependent on people spending money and keeping the wheels turning.
Even if the politicians were to agree at the last minute, there is a danger that the amount of the check will be much less than what many expect.
Without a crisis package from the crown, much-needed emergency aid directly to American businesses, especially small and medium-sized businesses, will also be lacking.
– This crisis package has taken a long time. That be Come on, but now he’s starting to do a little extra time, says Olav Chen.
“I’ve seen this story before”
Although it is likely to be a few difficult winter months before vaccination takes place, Chen notes that one is now a little more familiar with the development.
– It was much worse in March of this year, when you did not know how long the crisis would last and when a vaccine would arrive. Vaccination is already underway. And the market has seen this story before, he notes:
– When infection rates fell dramatically this summer, you could see how strong growth was from just the second to third quarters. And we will see the same positive development again in a few months, both in the US and in the euro zone. Just look at how well China has recovered in recent months, where economic growth is now skyrocketing, says Olav Chen.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content can only be done with written permission or as permitted by law. For more terms, see here.
