Agency Annual

  • In many years, annual reviews of market trends and total return tallies are dry recitation of numbers. Not this time. Investors’ strategy looked past the wreckage of 2020 to concentrate exclusively on recovery and the end of pandemic. Understanding last year’s anticipation of the promised land provides much of the road map to investing in 2021. Exhibit A is this morning’s reaction to a bad job market report expected to bring stimulus. Can events and the economy deliver on expectations for federal spening and vaccines?
  • As the first two charts in the report capture, markets looked past a lot of difficult issues last year. The result is i) premium valuations in risk assets, ii) widespread expectations of much faster inflation (but only in the US), and iii) fear large investors will shun the ever growing slate of Treasury auctions.
  • The report concludes with tables of quarterly returns for the second half of the year and the year’s results by first and second halves.
  • Summary: 2020 isn’t over. Its influence will last all this year.

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