George Lagarias, chief economist at Mazars shares three things investors should watch this week.
New varients, ‘lockdown fatigue’ in the developed world, and low vaccine availability in emerging markets, show the fight against COVID is far from over.
That considered Langarias suggests Investment managers will have to ignore most economic guages in the next few months, “at least until a modicum of normality returns to the global value chains.
Lagarias suggests managers would be wise to focus on the key driver of economic activity “which is still Covid-19.”
He highlights news about renewed lockdowns in Germany and France and a very sharp spike in India already drawing the attention of markets.
Lagarias concludes, “Portfolio managers worried about new variants, coupled with ‘lockdown fatigue’ in the developed world and low vaccine availability in many emerging markets, may understand that while valuations reflect a normalisation of earnings, the fight against the pandemic is far from over.”
George Lagarias full statement;
“Apart from some volatility around news that the US government was considering hiking capital gains taxes for very high-income families and some hawkish thoughts during the latest ECB meeting, last week featured a dearth of financial news. On the economic front, annual indicators are now extremely volatile as current numbers compare against the same chaotic period last year. Investment managers will probably have to ignore most economic gauges in the next few months, at least until a modicum of normality returns to global value chains.
“Instead, managers should focus on the key driver of economic activity which is still Covid-19. Despite the positive narrative and high vaccination rates in the US and the UK, investors should be attuned to persistently low vaccination rates in Europe and globally. News about renewed lockdowns in Germany and France and a very sharp spike in India have already drawn the attention of markets. Supply chains are again under threat. Wounded by last year’s experience, when markets initially failed to react to the Wuhan news and dropped sharply after the first death in Italy, the investment world will likely remain particularly sensitive to the pandemic newsflow. The latest variant to trouble health officials, the so-called ‘Indian’ B.1.617 variant, has drawn some investor concern.
“Portfolio managers worried about new variants, coupled with ‘lockdown fatigue’ in the developed world and low vaccine availability in many emerging markets, may understand that while valuations reflect a normalisation of earnings, the fight against the pandemic is far from over. That also means that risk assets will remain correlated to stimulus availability, both on the monetary and the fiscal front.”
