Summary

Gerard Minack gave a very interesting presentation that highlighted the key charts in his 84-page Chart Pack, which is entitled: “Global Outlook – Covid-19 changes everything”. With 4 charts per page, Gerard covered a lot of ground. First, he explained his multi-year view focussing on how the period of secular stagnation had effectively been brought to an end by the Covid-19 pandemic and the consequent revival of fiscal policy. With the decline of globalisation and structural changes to the US labour market which he outlined in some depth, he argued that the trends of the last few decades when interest rates were falling will now reverse. Interest rates will be higher for longer, making the use of leverage less attractive for investors. Against this backdrop, the US Fed will likely find it impossible to contain wage inflation without causing a recession. Equity markets generally fail to discount recessions as they are not as far sighted as is commonly supposed, a conclusion he backed up with a series of charts taken from previous market cycles. In China, years of excessive capex were seen as casting a shadow on the future. Further out, Gerard believes that the next market paradigm will revolve around increasing capex and the revival of manufacturing across the major developed economies with the main outperformers being the US (again), Japan and emerging markets ex-China.

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