Pause for (sobering) thought

Joint Research & Front Office Communication
Generali Insurance Asset Management S.p.A.
Società di gestione del risparmio

It Ain’t Over Till It’s Over. The coronavirus contagion continues to slow, but it is not a straight line to zero. In the two weeks to 10 April, the daily growth in the total number of recorded cases globally had slowed linearly from about 12% to 6%. But over the past week that pace has lost just over one point (now below 5%). Unfortunately the decline towards 0% is likely to be asymptotic. And until the number of new cases falls to a very low level, it will be hard to ease the lockdowns measures. The risk indeed is that a second wave of infections would cause more deaths and force society back into severe lockdown.



US: Fiscal stimulus to boost GDP growth to 5.5% in 2021
The thin majority in the Senate will allow the incoming administration to deliver quickly a sizeable fiscal stimulus. We expect a package worth around US$ 800bn (on top of the US$ 900bn already agreed on in December), centred on the strengthening of direct income support to households, extended unemployment benefit and aid to local governments.
Last minute Brexit deal merely avoids the worst
A last-minute deal avoids falling back to WTO rules: After intense and painful negotiations, the UK and the EU finally agreed on Christmas eve on a Trade and Cooperation agreement. This prevented both sides to fallback to WTO rules.
2021 will see a ‘repair’ of the deep Covid-19 damages, with the economy set to rebound strongly as society normalises into summer. But there is much to despair about. Potential growth will be lower out of this crisis. Employment will recover more slowly and Covid has fanned inequalities. Investors can also lament about the fall of future investment returns.