One way to think about low interest rates and quantitative easing is that it’s like kindling — while it can be used to set a fire, it still needs something to ignite it.
“This means that a greater portion of the liquidity that has been injected so far as a function of QE [quantitative easing] and credit creation, would be deployed into higher yielding noncash assets such as equities into next year,” he said. While the model leads to a fair value for the S&P 500 SPX, +0.19% of 3,172 at the end of 2020, it vaults to about 4,190 by the end of 2021. “This effectively means that the market has looked through the short-term spike in uncertainty as well as much of the hit to 2020 earnings, but still has another 15% of upside by end-2021,” he wrote.
“The failure of core bond yield curves to steepen following this week’s vaccine announcement by Moderna presents in our opinion an additional near-term headwind for the value rotation trade,” he said.For all of the hope around vaccines — Pfizer says its coronavirus vaccine it’s making with BioNTech BNTX, +3.90% is 95% effective, up from its initial estimate of 90% effectiveness — the current COVID-19 situation is still bleak. Hospitalizations in the U.S.
Not 30%?
good
is the argument something like this: 'they climb 10% to 15% most years' ?
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