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Santa’s outlook for 2021: coronavirus recovery, vaccines and inflation risks
- We should expect a wealth of positive recovery and vaccine news early in the new year, with China leading the way, but also growing risks to business confidence
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I met the old boy wheezing up a track on the Lantau Trail. “I’ve taken up hill walking”, he puffed. “The pubs are shut and the beaches are closed. I have no idea why. Scientists say that no one has ever caught Covid-19 on a beach, so the shopping malls are now packed!”
Santa sat on a large rock overlooking the magnificently pristine Hong Kong seascape that the government is going to destroy with their “No Lantau Tomorrow” plan. He pulled out an enormous hip flask and took a large draught of Scotland’s finest essence.
His eyeballs rolled and he gasped as the amber nectar seared his throat. “Purely for medicinal purposes,” he grinned. “I know you want to ask my views on next year’s financial markets – this is the seventh year we’ve done it.”
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A pause was an excuse for another enormous swig. “2021 is the easiest forecast of all because it’s all about momentum and trends. Markets are no longer supported by old-fashioned theories of value and economic rationality but by narrative.
“Zero interest rates mean that the old economic relationships and calculation of value that we knew and loved are now irrelevant. It’s all about the stories that move the market. It is the age of narrative finance.”
I looked puzzled. “2021 is very simple. It’s going to be dominated by the huge weight of money injected this year by the authorities to protect jobs and to stop the markets from going down. Listen. In 2008, the combined balance sheets of the European, Japanese, UK and US central banks totalled a mere US$4.1 trillion; today it is around US$21 trillion!
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