{"id":688,"date":"2020-11-23T03:59:51","date_gmt":"2020-11-23T03:59:51","guid":{"rendered":"https:\/\/halcyonpw.com.au\/?p=688"},"modified":"2020-11-23T03:59:53","modified_gmt":"2020-11-23T03:59:53","slug":"market-update-reading-the-crystal-ball-for-2021","status":"publish","type":"post","link":"https:\/\/halcyonpw.com.au\/market-update-reading-the-crystal-ball-for-2021\/","title":{"rendered":"Market Update | Reading the Crystal Ball for 2021"},"content":{"rendered":"\n
There is no need to dwell on how wrong everyone would have been sitting down this time last year trying to predict 2020. With that in mind, we outline below what we think next year holds, drawing references to many of the themes we have written about over the course of this year. We think markets will look through the current explosion in Covid-19 cases and deaths in the Northern Hemisphere because of the availability of excellent vaccines. This should support some rotation away from growth stocks (e.g. technology stocks such as Amazon and Microsoft) into value (i.e. companies that will benefit from economies re-opening). This process has already begun. We think this rotation will be more sustainable than the previous fits and starts we have seen over the past decade and could last well into the second half of next year. Beyond this rotation, we think there is a good chance equity markets will come under pressure from rising bond yields. When considering rising bond yields, the benchmark yield that we refer to in this Insight is the US ten-year Government Bond yield.<\/p>\n\n\n\n
Vaccination reflation<\/strong><\/p>\n\n\n\n The very recent news that two of the leading Covid-19 candidates (Pfizer and Moderna) were more than 90% effective at preventing infection in stage 3 trials is exceptionally positive. Prior to this announcement, we were concerned that vaccine effectiveness would be similar to that of the flu vaccine (see below), which would have required many more people to be inoculated before population level immunity is achieved.<\/p>\n\n\n\n