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In 2021 the world will get vaccinated. The second half of the year should see the start of a strong economic recovery. Democrat election victories in Georgia should result in a significantly more stimulative fiscal policy. However, expectations of a $3,000 billion package seem exaggerated due to the minimal Democrat majority in the Senate as well as the presence there of some centrist, traditional Democrats. Sooner or later, the Fed and other central banks will probably have to fight a too-rapid steepening of the yield curve in order to ensure the sustainability of government debt levels.

Independent asset managers in Switzerland expect a significant stock market boom in foreign equities in 2021. They also believe in gold as a stable investment. Almost half of the players want to be vaccinated against Corona.

Market outlook Q1 2021: We expect global economic growth of around +4.5% in 2021. The second pandemic wave and the lockdown measures triggered by it will still slow down economic growth in the northern hemisphere in the coming months. More details on our assessments in the new Aquila Viewpoint.

Significant progress on the vaccination front increases the chances that the pandemic can be ended in most countries during 2021. However, a short-term relapse into recession in countries in the northern hemisphere is no longer avoidable due to the sharp rise in case numbers. As the beginning of the resumption of “normal operation” of the most damaged industries is becoming apparent, the financial markets can see through the recession hole. Presumably, this is why the wave of insolvencies, e.g. in the tourism sector, has been able to flatten off considerably. A rotation into asset stocks and “pandemic victims” could continue.

The odds now favor the Democrats winning the next presidency, Congress is likely to remain substantially in Republican hands. Stock markets celebrated this increasingly likely election result with very strong price gains.

Parts of Europe are already in lockdown as governments fight the second wave of Covid-19. The US lags Europe in terms of the second wave but will probably soon[NP1] see a sharp rise in infection rates and be forced to implement new restrictions. Thus it is only a matter of time before additional fiscal and monetary stimulus is launched on a worldwide basis. (In the case of the US, probably “soon” after the elections.)

Poll data continue to predict a US election win for the Democrats. But the risk of there being no clear winner is high. A Democrat win should be good for infrastructure-related and climate-neutral businesses.

Market outlook Q4 2020: The economic recovery continues at a slower pace due to a renewed rise in the number of cases. The impact of the pandemic forced virtually all central banks in the developed world to bring their policy rates closer to the zero bound and thus to BOJ and ECB policies. More details on our assessments in the new Aquila Viewpoint.

Independent asset managers in Switzerland expect a second Corona wave in the next three months. Against this background, they expect a higher gold price.

Thanks to extremely stimulative fiscal and monetary policies economic data are improving and stock markets are booming. Further economic recovery and a continuation of the equity bull market will need further measures of stimulus.

Gold is now slightly overvalued and already discounts further monetary expansion. Indeed, excessive debt and related insolvency risks mean that a further increase in the money supply is likely. The gold price should continue to rise in the medium- term and gold mining stocks remain attractive.