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Banks have released a flood of forecasts for 2021 reflecting this attitude, anticipating a strong “V” shaped recovery that will materialize shortly.
“Following encouraging early data on vaccine efficacy, we remain confident that vaccines will be widely available by the second quarter of 2021,” UBS said in a report to clients titled “A Year of Renewal”. “This should help put Europe and the United States on a path to sustainable recovery. Economic activity in China has” already largely normalized “, added the strategists.
But with perfect prices in the financial markets, there is little room for error. And many real risks remain.
- Fragile trust: In many ways, the recovery is a game of confidence, Holger Schmieding of Berenberg Bank noted on Monday. After the spring lockdowns ended, spending picked up quickly. But Schmieding wonders: “What if consumers and businesses, twice bitten by the pandemic, remained much more cautious much longer after the second wave than after the first?” “Unlikely,” he added, but that cannot be ruled out.
- Vaccine distribution: Creating safe and effective vaccines is the first step in getting back to normal. But a lot will depend on distribution, which is likely to face major logistical challenges, and how it is used.
- Stimulus woes: Central banks have made it clear that they intend to keep their foot on the pedal, but appetite for generous government spending – especially in the United States, which has delayed further aid since March – may wane. Smaller aid programs could shock consumers when it matters most.
- Return of inflation: Low inflation has enabled central banks to provide unprecedented economic aid. But if inflation climbs faster than expected next year, they could be forced into a tight spot. Economists don’t expect this problem to materialize in 2021, but they are watching closely.
And all of that says nothing about the lingering effects of a harsh winter, which could fuel unemployment and worsen the scars of vulnerable businesses like restaurants, hotels and airlines.
The Bank of America notes that vaccine prices are already very optimistic. Its strategists believe stocks are still the go-to place – not least because low-yielding bonds seem like a poor alternative – but signal that vaccine execution and delayed stimulus are potential slowdowns.
“The disappointment around the success of the vaccines, the timing of distribution, the number of cold-weather cases and the stimulus stalemate could reduce that optimism,” they told customers last week.
Black Friday traffic plunged into stores
Foot traffic plunged into stores on Black Friday because of the pandemic.
Thanksgiving Day shopping traffic has fallen 95% as many stores have closed to give employees time and avoid crowds, reports my CNN Business colleague Shannon Liao.
Online shopping fared better, reinforcing the growing importance of internet sales for struggling retailers.
Customers spent $ 9 billion on Black Friday, according to Adobe Analytics, up nearly 22% from last year. It’s the second most important day ever to spend online.
Even when customers visited stores, it was often to pick up the items they had purchased online. In-store and curbside pickup has increased 52% this year, Adobe said.
“What we’re seeing this year is $ 1 out of $ 4 this season being spent online. And that’s a marked increase from last year where it was around $ 1 out of every $ 5. Vivek Pandya, senior digital analytics manager at Adobe, told CNN Business. . “Billions of extra dollars are being migrated online. And it is being done in a very short time because of the pandemic.”
Watch this space: Online shopping records could be shattered by Cyber Monday, with spending expected to hit $ 10.8 billion.
The National Retail Federation predicts that despite a tough economic environment, vacation sales will increase 3.6% to 5.2% from a year ago, to more than $ 755 billion. The question is whether all stores will benefit from this level of activity – or only those with a strong internet presence.
S&P Global and IHS Markit merge
IHS Markit offers economic analysis and metrics, especially surveys of purchasing managers in different countries around the world, which are closely watched by economists.
The agreement shows the growing importance and value of financial data companies in global financial markets. Other major players in the field include Bloomberg, FactSet and Refinitiv.
next
Also today: Chicago Purchasing Managers Index for November publications at 9:45 a.m.ET.
Coming tomorrow: Fed Chairman Jerome Powell and outgoing Treasury Secretary Steven Mnuchin testify before the Senate Banking Committee.
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