We are likely as equally excited about what 2021 will bring us as we are about seeing the back of 2020.
Of the two dozen or so forecast calls and year-end pieces I have read, I have not come across one analyst deviating from the popular view: higher equities, a steeper US yield curve, a weaker dollar, stronger EM currencies, equities, and bonds, and higher commodity prices.
With the exception of the dollar, I have had this outlook since the middle of 2020 for most assets and have been positive on equities since late March last year. Here, I will try to focus on what might be better value-add insights.
It is not that I disagree with the consensus forecasts – which are very similar to my own view – but I believe there are very important structural developments happening in the background that have not received the attention they deserve.
Dollar weakness
First of all, I restate my long-held market view, which is consistent with the current consensus outlook. With the dollar, I concede that the dollar index has indeed weakened (by about 6.7% measured by the EUR-heavy DXY and 0.6% measured by the Fed’s Broad Dollar Index during 2020)
