Note Précis Nov 18,2020: Old is New – Coordination Not Confrontation:

Note Précis Nov 18,2020: Old is New – Coordination Not Confrontation:  For delivery of sustained recovery, coordination seems appropriate, not confrontation. Massive quantitative ease variants and Covid-19 pandemic have unleashed infatuation with mega data milli-second responses. Still, there lie old fashioned stepwise imperatives once known as political economy. Through the 1940s for instance, after pestilence, financial excess and war ravages, there emerged a decades long compendium. Coordination ensued from healthcare, trade, finance and more, including political give and take.

Political economy leadership now requires others to cooperate and not be placed as a post-2020 election U.S responsibility.

Irrespective of vaccine success, the flaring of pandemic and deficits, the Trans Pacific Partnership (TPP) followed in mid- November 2020 by the Regional Comprehensive Economic Partnership (RCEP) presage political economy changes beyond milli second response.

On November 16 2020, the Financial Stability Board alluded to fears of breakdown in the U.S. Treasury markets in March 2020. It is another illustration of risk. As counterweight to the inevitable lure of momentum, assaying the value of investments has importance. With high valuation and solvency risk existent among other factors including momentum fervor, volatility in equities and fixed income is likely to be elevated.

Equity sector rotation is likely to include restructuring and quality as themes, irrespective of size. In cyclicals amid pandemic, consumer cocooning seems increased. Overall as seen for decades in Germany, continual investment in infrastructure and training is likely to pay off. We favor Industrials broadly from products to resources.

In growth, momentum fervor has been for social media but it faces increased regulation worldwide. Instead, we favor Healthcare. Higher demand is likely to be broadly long lasting for healthcare protective practices, devices and relief. The momentum neglected Financials remain crucial within capital markets.

Currency volatility appears again a risk. Within underweighting fixed income, we favor capital preservation by focusing on short duration. We also favor as currency volatility hedge, precious metals like gold bullion instruments in asset mix. StrategeInvest’s independent consultancy operates as Subodh Kumar & Associates. The views represented are those of the analyst at the date noted. They do not represent investment advice for which the reader should consult their investment and/or tax advisers. Any hyperlinks are for information only and not represented as accurate. E.o.e.