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Top Ten Market Themes for 2021: A Shot in the Arm

Published: 10:12 19 Nov 2020 GMT

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19 November 2020

 

Video commentary for November 18th 2020

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: Midcaps and small caps continue to outperform megacaps. industrial metals turning to outperformance, lithium bottoming, gold eases, 

 

Top Ten Market Themes for 2021: A Shot in the Arm

Thanks to a subscriber for this report from Goldman Sachs which may be of interest. Here is a section:

1.Vaccine-led Recovery to Lift Cyclical Assets
2. Navigating the Path
3. A Steeper Real Yield Curve
4. Europe: Two Steps forward, One Step Back
5. China: Forging Ahead, with Assets in Tow
6. A New Commodity Bull Cycle
7. EM Outperformance: More than Before, Less than Sometimes
8. Rotations: Cyclical, North Asia in Focus but Vaccine News Key to Near Term
9. In Search of New (and Old) Safe Havens, Hedges and Diversifiers
10. Risks from Corona and Beyond

 

Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

If we had to distill the priorities of governments next year there is only one word captures their intentions. Reflation. With millions of unemployed people, defaults only kept at bay by massive intervention and rising public discontent economic revival is the only possible solution. That’s true of every country. No one has been left unscathed by the pandemic. Whether the challenge has been domestic or from a loss of export markets, the solution is the same. Reflation.

 

Merkel Under Fire as Virus Strategy Sparks Anger From All Sides

This article by Arne Delfs and Raymond Colitt for Bloomberg may be of interest to subscribers. Here is a section:

Berlin police used water cannons to break up a large demonstration near Brandenburg Gate on Wednesday. Participants - - which totaled 14,000 people, according to police -- refused to
abide by distancing and hygiene rules, while some threw bottles and other objects.

Pressure has been growing on German authorities, which are facing a crunch meeting next week to lay out a long-term plan to fight the pandemic. With restrictions likely to be extended and intensified, public anger and political tensions are rising.

The demonstration was organized to oppose a law being debated by the Bundestag that would expand the government’s powers to place restrictions on the public. Critics say the measures go too far. The far-right Alternative for Germany likened the legislation to policies under authoritarian regimes.

While the freedom of assembly must be guaranteed, social distancing and other rules to contain the spread of the virus must also be respected, government spokeswoman Ulrike Demmer said during a regular news conference.

 

Eoin Treacy's view

Facing down a water cannon is not something protestors will soon forget. It may yet prove to further fortify the resolve of the populist right wing movement to challenge the status quo.

The challenge for all governments as they measure their response to the pandemic is what freedoms to infringe. Everyone knows that temporary taxes have a tendency to become permanent. The legitimate fear is that if the government can close businesses by writ what is to stop them doing it again in future? With a clear precedent, the range of potential reasons for closing businesses can easily increase.

 

Platinum Heads for Record Deficit This Year on Supply Disruption

This article by Eddie Spence for Bloomberg may be of interest to subscriber. Here is a section:

Platinum markets are poised for a record deficit this year as disruptions to key producers and an increase in investor appetite far outstripped the pandemic’s effect on industrial demand.

Pandemic-related mine closures and outages at Anglo American PLC’s converter plant in South Africa have cut supply, according to a report by the World Platinum Investment Council. The group projects a deficit of 1.2 million ounces for 2020, the largest since records began, and almost four times higher than it forecast two months ago.

Despite the record shortfall, platinum has declined about 3% this year, making it one of the worst-performing major metals. Demand from auto-catalysts, the biggest consumers of platinum, is forecast to drop 16%. By contrast, gold has surged 24%, while sister metal palladium has advanced more than 19%.

 

Eoin Treacy's view

Platinum is an industrial metal which saw demand decline sharply following the diesel scandal. Recent news that electric vehicle sales now outpace those of diesel cars in Europe is a testament to how low demand has fallen. That has resulted in the price being among the worst performers in both the industrial and precious metals sectors over the last few years.  

 

Panasonic Is the Latest Company Betting on Electric Vehicles, Powering Past Its Tesla Partnership to Explore a Venture in Norway

This article by Jack Denton for Barrons may be of interest to subscribers. Here is a section:

Europe is one of the fastest-moving spaces in the race to dominate an expected boom in electric vehicles, with at least 12 countries planning a ban on internal combustion engine vehicles in coming years. U.K. Prime Minister Boris Johnson announced on Wednesday a ban on the sale of new gasoline and diesel cars, to come into effect by 2030.

Tesla is building a gigafactory in Germany and is reportedly planning one in the U.K., while one of its key rivals, Northvolt, is building a gigafactory in Sweden. Established European car makers like Daimler, Volkswagen, and BMW are racing to build electric vehicles on their own or through partnerships, and Panasonic has previously supplied batteries to Volkswagen and Peugeot.

 

Eoin Treacy's view

At its recent battery day Tesla announced they plan on ditching outside help in producing batteries over the coming few years. That’s one of the primary ways they aim to achieve lower production costs. It obviously represents a business risk for Panasonic and this agreement appears to be a first step toward diversifying.

 

Eoin's personal portfolio - new trading position opened October 21st

Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.

 

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